Radioshack 10K 2010

Header
SUBMISSION:
ACCESSION NUMBER: 000009628911000010
TYPE: 10K
PUBLIC DOCUMENT COUNT: 22
PERIOD: 20101231
FILING DATE: 20110222
DATE AS OF CHANGE: 20110222
FILER:
COMPANY DATA:
CONFORMED NAME: RADIOSHACK CORP
CIK: 0000096289
ASSIGNED SIC: 5731
IRS NUMBER: 751047710
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10K
ACT: 34
FILE NUMBER: 00105571
FILM NUMBER: 11628585
BUSINESS ADDRESS:
STREET1: 300 RADIOSHACK CIRCLE
CITY: FORT WORTH
STATE: TX
ZIP: 76102
PHONE: 8174153700
MAIL ADDRESS:
STREET1: 300 RADIOSHACK CIRCLE
CITY: FORT WORTH
STATE: TX
ZIP: 76102
FORMER COMPANY:
FORMER CONFORMED NAME: TANDY CORP /DE/
DATE CHANGED: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: TANDY LEATHER CO
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN HIDE & LEATHER CO
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 15571
________________________
RADIOSHACK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 751047710
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Mail Stop CF3201, 300 RadioShack Circle, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 4153011
________________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock, par value $1 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the registrant is a wellknown seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No __
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes __ No X
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation SK is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10K or any amendment to this Form 10K.__
Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer or a smaller reporting
company. See the definitions of large accelerated filer,accelerated filerand smaller reporting companyin Rule 12b2 of the
Exchange Act.
Large accelerated filer [ X ] Accelerated filer [ ] Nonaccelerated filer [ ] Smaller reporting company [
]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Act). Yes __ No X
As of June 30, 2010, the aggregate market value of the voting common stock of the registrant held by nonaffiliates of the registrant was
$1,941,281,617 based on the New York Stock Exchange closing price. For the purposes of this disclosure only, the registrant has assumed
that its directors, executive officers and beneficial owners of 5% or more of the registrants common stock as of June 30, 2010, are the
affiliates of the registrant.
As of February 15, 2011, there were 105,779,701 shares of the registrant's Common Stock outstanding.
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Documents Incorporated by Reference
Portions of the Proxy Statement for the 2011 Annual Meeting of Stockholders are incorporated by reference into Part III.
TABLE OF CONTENTS
Page
PART I
Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 10
Item 2. Properties 10
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Executive Officers of the Registrant 13
PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
14
Item 6. Selected Financial Data 17
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations 19
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 36
Item 8. Financial Statements and Supplementary Data 36
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 36
Item 9A. Controls and Procedures 36
Item 9B. Other Information 36
PART III
Item 10. Directors, Executive Officers and Corporate Governance 37
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 37
Item 13. Certain Relationships and Related Transactions, and Director Independence 38
Item 14. Principal Accountant Fees and Services 38
PART IV
Item 15. Exhibits, Financial Statement Schedules 38
Signatures 39
Index to Consolidated Financial Statements 40
Report of Independent Registered Public Accounting Firm 41
Index to Exhibits 70
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PART I
ITEM 1. BUSINESS.
GENERAL
RadioShack Corporation was incorporated in Delaware in 1967. Throughout this report, the terms our,we,usand RadioShack
refer to RadioShack Corporation, including its subsidiaries. We primarily engage in the retail sale of consumer electronics goods and
services through our RadioShack store chain. We seek to differentiate ourselves from our various competitors by providing:
Innovative mobile technology products and services, as well as products related to personal and home technology and power
supply needs at competitive prices
Convenient neighborhood locations
Knowledgeable, objective and friendly service
Unique private brand offers and exclusive branded promotions
Our daytoday focus is concentrated in four areas:
Providing our customers with a positive instore experience
Growing gross profit dollars
Controlling costs throughout the organization
Utilizing funds generated from operations to enhance longterm shareholder value
Additional information regarding our business segments is presented below and in Managements Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) included elsewhere in this Annual Report on Form 10K.
U.S. RADIOSHACK COMPANYOPERATED STORES
At December 31, 2010, we operated 4,486 U.S. companyoperated stores under the RadioShack brand located throughout the United
States, as well as in Puerto Rico and the U.S. Virgin Islands. These stores are located in strip centers and major shopping malls, as well as
individual storefronts. Each location carries a broad assortment of both name brand and private brand consumer electronics products.
Our product lines are categorized into seven platforms. Our wireless platform includes postpaid and prepaid wireless handsets and
communication devices such as scanners and GPS products. Our accessory platform includes home entertainment, wireless, music,
computer, video game and GPS accessories; media storage; power adapters; digital imaging products and headphones. Our modern home
platform includes home audio and video endproducts, personal computing products, residential telephones, and Voice over Internet
Protocol products. Our personal electronics platform includes digital cameras, digital music players, toys, satellite radios, video gaming
hardware, camcorders, and general radios. Our power platform includes general and special purpose batteries and battery chargers. Our
technical platform includes wire and cable, connectivity products, components and tools, and hobby products. We also provide consumers
access to thirdparty services such as prepaid wireless airtime and extended service plans in our service platform.
KIOSKS
At December 31, 2010, we operated 1,267 kiosks located throughout most of the United States. These kiosks are located inside Target and
Sams Club stores. These locations, which are not RadioShackbranded, offer primarily wireless handsets with activation of thirdparty
wireless services.
In February 2009, we signed a contract extension with Sams Club through March 31, 2011, with a transition period ending June 30,
2011, to continue operating kiosks in certain Sams Club locations. As of December 31, 2010, we operated 417 of these kiosks. This
transition will begin on April 1, 2011, and conclude on June 30, 2011, with the assignment to Sams Club of all kiosks operated by the
Company in Sams Club stores. As part of the terms of the contract, we assigned the operation of 22 and 66 kiosk locations to Sams
Club in 2010 and 2009, respectively.
In April 2009 we agreed with Sprint to cease our arrangement to jointly operate the Sprintbranded kiosks in operation at that date. This
agreement allowed us to operate these kiosks under the Sprint name for a reasonable period of time, allowing us to transition the kiosks to
a new format. In August 2009, we transitioned these kiosks to multiple wireless carrier RadioShackbranded locations. Most of these
locations are now managed and reported as extensions of existing RadioShack companyoperated stores located in the same shopping
malls.
In the fourth quarter of 2009, we commenced a test rollout of kiosk locations in approximately 100 Target stores. In the third quarter of
2010, we signed a multiyear agreement to operate kiosk locations in certain Target stores (Target Mobile). We operated 850 Target
Mobile locations at December 31, 2010. We plan to operate Target Mobile locations in approximately 1,450 Target stores by June 30,
2011.
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OTHER
In addition to the reportable segments discussed above, we have other sales channels and support operations described as follows:
Dealer Outlets: At December 31, 2010, we had a network of 1,207 RadioShack dealer outlets, including 34 located outside of North
America. Our North American outlets provide name brand and private brand products and services, typically to smaller communities.
These independent dealers are often engaged in other retail operations and augment their businesses with our products and service
offerings. Our dealer sales derived outside of the United States are not material.
RadioShack.com: Products and information are available through our commercial website www.radioshack.com. Online customers can
purchase, return or exchange various products available through this website. Additionally, certain products ordered online may be picked
up, exchanged or returned at RadioShack stores.
International Operations: As of December 31, 2010, there were 211 companyoperated stores under the RadioShack brand, nine dealers,
and one distribution center in Mexico. Prior to December 2008, these operations were overseen by a joint venture in which we were a
slightly less than 50% minority owner with Grupo Gigante, S.A.B. de C.V. In December 2008, we increased our ownership of this joint
venture to 100%.
Support Operations:
Our retail stores, along with our kiosks and dealer outlets, are supported by an established infrastructure. Below are the major components
of this support structure.
Distribution Centers At December 31, 2010, we had four U.S. distribution centers shipping to our U.S. retail locations and dealer
outlets. One of these distribution centers also serves as a fulfillment center for our online customers. Additionally, we have a distribution
center that ships fixtures to our U.S. companyoperated stores and kiosks.
RadioShack Technology Services (RSTS) Our management information system architecture is composed of a distributed, online
network of computers that links all stores, customer channels, delivery locations, service centers, credit providers, distribution facilities
and our home office into a fully integrated system. Each store has its own server to support the pointofsale (POS) system. The
majority of our U.S. companyoperated stores and kiosks communicate through a broadband network, which provides efficient access to
customer support data. This design also allows store management to track daily sales and inventory at the product or sales associate level.
RSTS provides the majority of our programming and systems analysis needs.
RadioShack Global Sourcing (RSGS) RSGS serves our wideranging international import/export, sourcing, evaluation, logistics and
quality control needs. RSGSs activities support our name brand and private brand businesses.
Consumer Electronics Manufacturing We operate two manufacturing facilities in the United States and one in China. These three
manufacturing facilities employed approximately 1,800 people as of December 31, 2010. We manufacture a variety of products, primarily
sold through our retail outlets, including telephones, antennas, wire and cable products, and a variety of hardtofindparts and
accessories for consumer electronics products.
SEASONALITY
As with most other specialty retailers, our net sales and operating revenues, operating income and operating cash flows are greater during
the fourth quarter, which includes the majority of the holiday shopping season in the U.S., than during other periods of the year. There is a
corresponding preseasonal inventory buildup, which requires working capital related to the anticipated increased sales volume. This is
described in Cash Requirementsin our MD&A. Also, refer to Note 17 Quarterly Data (Unaudited)in the Notes to Consolidated
Financial Statements for data showing seasonality trends. We expect this seasonality to continue.
PATENTS AND TRADEMARKS
We own or are licensed to use many trademarks and service marks related to our RadioShack stores in the United States and in foreign
countries. We believe the RadioShack name and marks are well recognized by consumers, and that the name and marks are associated
with highquality products and services. We also believe the loss of the RadioShack name and RadioShack marks would materially
adversely affect our business. Our private brand manufactured products are sold primarily under the RadioShack, AUVIO, Accurian,
Enercell or Gigaware trademarks. We also own various patents and patent applications relating to consumer electronics products.
We do not own any material patents or trademarks associated with our kiosk operations.
SUPPLIERS AND NAME BRAND RELATIONSHIPS
Our business strategy depends, in part, upon our ability to offer name brand and private brand products, as well as to provide our
customers access to thirdparty services. We utilize a large number of suppliers located in various parts
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of the world to obtain raw materials and private brand merchandise. We do not expect a lack of availability of raw materials or any single
private brand product to have a material effect on our operations overall or on any of our operating segments. We have formed vendor and
thirdparty service provider relationships with wellrecognized companies such as Sprint, AT&T, TMobile, Verizon, Apple, Casio,
Garmin, HewlettPackard, Microsoft, Research In Motion, Samsung and SanDisk. In the aggregate, these relationships have or are
expected to have a significant effect on both our operations and financial strategy. Certain of these relationships are important to our
business; the loss of or disruption in supply from these relationships could materially adversely affect our net sales and operating
revenues. Additionally, we have been limited from time to time by various vendors and suppliers on an economic basis where demand has
exceeded supply.
ORDER BACKLOG
We have no material backlog of orders in any of our operating segments for the products or services we sell.
COMPETITION
Due to consumer demand for wireless products and services, as well as rapid consumer acceptance of new digital technology products, the
consumer electronics retail business continues to be highly competitive, driven primarily by technology and product cycles.
In the consumer electronics retailing business, competitive factors include price, quality, features, product availability, consumer services,
manufacturing and distribution capability, brand reputation and the number of competitors. We compete in the sale of our products and
services with several retail formats, including national, regional, and independent consumer electronics retailers. We compete with
department and specialty retail stores in more select product categories. We compete with wireless providers in the wireless handset
category through their own retail and online presence. We compete with mass merchandisers and other alternative channels of
distribution, such as mail order and ecommerce retailers, on a more widespread basis. Numerous domestic and foreign companies also
manufacture products similar to ours for other retailers, which are sold under nationallyrecognized brand names or private brands.
Management believes two primary factors differentiate us from our competition. First, we have an extensive physical retail presence with
convenient locations throughout the United States. Second, our specially trained sales staff is capable of providing costeffective solutions
for our customersroutine electronics needs and distinct electronics wants, assisting with the selection of appropriate products and
accessories and, when applicable, assisting customers with service activation.
We cannot give assurance that we will compete successfully in the future, given the highly competitive nature of the consumer electronics
retail business. Also, in light of the everchanging nature of the consumer electronics retail industry, we would be materially adversely
affected if our competitors were able to offer their products at significantly lower prices. Additionally, we would be materially adversely
affected if our competitors were able to introduce innovative or technologically superior products not yet available to us, or if we were
unable to obtain certain products in a timely manner or for an extended period of time. Furthermore, our business would be materially
adversely affected if we failed to offer valueadded solutions or if our competitors were to enhance their ability to provide these
valueadded solutions.
EMPLOYEES
As of December 31, 2010, we employed approximately 36,400 people, including 1,300 temporary seasonal employees. Our U.S.
employees are not covered by collective bargaining agreements, nor are they members of labor unions. We consider our relationship with
our employees to be good.
AVAILABLE INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), and rules and
regulations adopted by the U.S. Securities and Exchange Commission (SEC) under that Act. The Exchange Act requires us to file
reports, proxy statements and other information with the SEC. Copies of these reports, proxy statements and other information can be
inspected and copied at:
SEC Public Reference Room
100 F Street, N.E.
Room 1580
You may obtain information on the operation of the Public Reference Room by calling the SEC at 1800SEC0330. You may also
obtain copies of any material we have filed with the SEC by mail at prescribed rates from:
Public Reference Section
Securities and Exchange Commission
100 F Street, N.E.
You may obtain these materials electronically by accessing the SECs home page on the Internet at:
http://www.sec.gov
In addition, we make available, free of charge on our corporate website, our Annual Report on Form 10K, Quarterly Reports on Form
10Q, Current Reports on Form 8K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act, as
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well as our proxy statements, as soon as reasonably practicable after we electronically file this material with, or furnish it to, the SEC. You
may review these documents, under the heading Investor Relations,by accessing our corporate website:
http://www.radioshackcorporation.com
For information regarding the net sales and operating revenues and operating income for each of our business segments for fiscal years
ended December 31, 2010, 2009 and 2008, please see Note 16 Segment Reportingin the Notes to Consolidated Financial
Statements.
ITEM 1A. RISK FACTORS.
One should carefully consider the risks and uncertainties described below, as well as other information set forth in this Annual Report on
Form 10K. There may be additional risks that are not presently material or known, and the following list should not be construed as an
exhaustive list of all factors that could cause actual results to differ materially from those expressed in forwardlooking statements made
by us. If any of the events described below occur, our business, results of operations, financial condition, liquidity or access to the capital
markets could be materially adversely affected.
We may be unable to successfully execute our strategy to provide costeffective solutions to meet the routine consumer electronics needs
and distinct consumer electronics wants of our customers.
To achieve our strategy, we have undertaken a variety of strategic initiatives. Our failure to successfully execute our strategy or the
occurrence of certain events, including the following, could materially adversely affect our ability to maintain or grow our comparable
store sales and our business generally:
Our inability to keep our extensive store distribution system updated and conveniently located near our target customers
Our employeesinability to provide solutions, answers, and information related to increasingly complex consumer electronics products
Our inability to recognize evolving consumer electronics trends and offer products that customers need or want
Adverse changes in national and worldwide economic conditions could negatively affect our business.
The continued uncertainty in the economy could have a significant negative effect on U.S. consumer spending, particularly discretionary
spending for consumer electronics products, which, in turn, could directly affect our sales. Consumer confidence, recessionary and
inflationary trends, equity market levels, consumer credit availability, interest rates, consumersdisposable income and spending levels,
energy prices, job growth, income tax rates and unemployment rates may affect the volume of customer traffic and level of sales in our
locations. Continued negative trends of any of these economic conditions, whether national or regional in nature, could materially
adversely affect our results of operations and financial condition.
In addition, potential disruptions in the capital and credit markets could have a significant effect on our ability to access the U.S. and
global capital and credit markets, if needed. These potential disruptions in the capital and credit market conditions could materially
adversely affect our ability to borrow under our credit facility, or materially adversely affect the banks that underwrote our credit facility.
The availability of financing will depend on a variety of factors, such as economic and market conditions, the availability of credit, and
our credit ratings. If needed, we may not be able to successfully obtain any necessary additional financing on favorable terms, or at all.
Our inability to increase or maintain profitability of our operations could materially adversely affect our results of operations and financial
condition.
A critical component of our business strategy is to improve our overall profitability. Our ability to increase profitable sales in existing
stores may be affected by:
Our success in attracting customers into our stores
Our ability to choose the correct mix of products to sell
Our ability to keep stores stocked with merchandise customers will purchase
Our ability to maintain fullystaffed stores with appropriately trained employees
Our ability to remain relevant to the consumer
Our ability to sustain existing retail channels such as our kiosks
Any reductions or changes in the growth rate of the wireless industry or other changes in the dynamics of the industry could materially
Sales of wireless handsets and the related commissions and residual income constitute a significant portion of our total revenue.
Consequently, changes in the wireless industry, such as those discussed below, could materially adversely affect our results of operations
and financial condition.
Lack of growth in the wireless industry tends to have a corresponding effect on our wireless sales. Because growth in the wireless industry
is often driven by the adoption rate
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of new wireless handset and wireless service technologies, the absence of these new technologies, our suppliers not providing us with
these new technologies, or the lack of consumer interest in adopting these new technologies, could materially adversely affect our
business.
Another change in the wireless industry that could materially adversely affect our business is wireless industry consolidation.
Consolidation in the wireless industry could lead to a concentration of competitive strength within a few wireless carriers, which could
materially adversely affect our business if our ability to obtain competitive offerings from our wireless suppliers is reduced or if
competition increases from wireless carrier stores or other retailers.
Our competition is both intense and varied, and our failure to effectively compete could materially adversely affect our results of
operations and financial condition.
In the retail consumer electronics marketplace, the level of competition is intense. We compete with consumer electronics retail stores as
well as bigbox retailers, large specialty retailers, discount or warehouse retailers, and alternative channels of distribution such as
ecommerce, telephone shopping services and mail order. We also compete with wireless carriersretail presence, as discussed above.
Some of these competitors are large, have great market presence, and possess significant financial and other resources, which may provide
them with competitive advantages over us.
Changes in the amount and degree of promotional intensity or merchandising strategy exerted by our current and potential competitors
could present us with difficulties in retaining and attracting customers. In addition, pressure from our competitors could require us to
reduce prices or increase our costs in one product category or across all our product categories. As a result of this competition, we may
experience lower sales, margins or profitability, which could materially adversely affect our results of operations and financial condition.
In addition, some of our competitors may use strategies such as lower pricing, valueadded services, wider selection of products, larger
store size, higher advertising intensity, improved store design, and more efficient sales methods. While we attempt to differentiate
ourselves from our competitors by focusing on the electronics specialty retail market, our business model may not enable us to compete
successfully against existing and future competitors.
We are dependent upon our relationships with a limited number of name brand product and service providers, and our inability to create,
maintain and renew relationships with these parties on favorable terms could materially adversely affect our results of operations
and financial condition.
A significant portion of our net sales and operating revenues is attributable to a limited selection of name brand products and service
providers. The concentration of net sales and operating revenues in certain of our platforms, such as our wireless platform, may mean that
our sales are more dependent upon a limited number of service providers such as Sprint, AT&T, TMobile and Verizon. In the aggregate,
these relationships have or are expected to have a significant effect on both our operations and financial strategy. If we are unable to
create, maintain or renew our relationships with such third parties on favorable terms or at all, our results of operations and financial
condition.
Our inability to maintain our historical gross margin levels could materially adversely affect our results of operations and financial
condition.
Historically, we have maintained gross margin levels ranging from 45% to 48%. We may not be able to maintain these margin levels in
the future due to various factors, including increased sales of lower margin products, such as personal electronics products and name brand
products, or declines in average selling prices of key products. If sales of lower margin items continue to increase and become a larger
percentage of our business without an overall growth in our sales, our gross profit could be materially adversely affected.
Our inability to collect receivables from our vendors and service providers could materially adversely affect our results of operations and
financial condition.
We maintain significant receivable balances from various vendors and service providers such as Sprint, AT&T, TMobile, and Verizon
consisting of commissions and other funds related to these relationships. At December 31, 2010 and 2009, our net receivables from
vendors and service providers were $291.0 million and $247.5 million, respectively. The average payment term for these receivable
balances is approximately 45 days. We do not factor these receivables. Changes in the financial condition of one or more of these vendors
or service providers could cause a delay or failure in collecting these receivable balances. A significant delay or failure in collecting these
receivable balances could materially adversely affect our results of operations and financial condition.
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Our inability to effectively manage our inventory levels, particularly excess or inadequate amounts of inventory, could materially
We source inventory both domestically and internationally, and our inventory levels are subject to a number of factors, some of which are
beyond our control. These factors, including technology advancements, reduced consumer spending and consumer disinterest in our
product offerings, could lead to excess inventory levels. Additionally, we may not accurately assess product life cycles, leaving us with
excess inventory. To reduce this excess inventory, we may be required to lower our prices, which could materially adversely affect our
results of operations and financial condition.
Alternatively, we may have inadequate inventory levels for particular items, including popular merchandise, due to factors such as
unanticipated high demand for certain products, unavailability of products from our vendors, import delays, labor unrest, untimely
deliveries, or the disruption of international, national or regional transportation systems. The effect of the occurrence of any of these
factors on our inventory supply could materially adversely affect our results of operations and financial condition.
Our inability to attract, retain and grow an effective management team or changes in the cost or availability of a suitable workforce to
manage and support our strategies could materially adversely affect our business.
Our success depends in large part upon our ability to attract, motivate and retain a qualified management team and employees. Qualified
individuals needed to fill necessary positions could be in short supply. The inability to recruit and retain such individuals on a continuous
basis could result in high employee turnover at our stores and in our company generally, which could materially adversely affect our
business and results of operations. Additionally, competition for qualified employees requires us to continually assess our compensation
structure. Competition for qualified employees has required, and in the future could require, us to pay higher wages to attract a sufficient
number of qualified employees, resulting in higher labor compensation expense. In addition, mandated changes in the federal minimum
wage or in health care reform may materially increase our compensation expense.
Our inability to successfully identify and enter into relationships with developers of new technologies or the failure of these new
technologies to be adopted by the market could materially adversely affect our ability to increase or maintain our sales and profitability.
Additionally, the absence of new services or products and product features in the categories we sell could materially adversely affect our
sales and profitability.
Our ability to maintain and increase revenues depends, to a large extent, on the periodic introduction and availability of new products,
services and technologies. If we fail to identify these new products, services and technologies, or if we fail to enter into relationships with
their developers prior to widespread distribution within the market, our sales and profitability could be materially adversely affected. Any
new products, services or technologies we identify may have a limited sales life.
Furthermore, it is possible that new products, services or technologies will never achieve widespread consumer acceptance, also adversely
affecting our sales and profitability. Finally, the lack of innovative consumer electronics products, features or services that can be
effectively featured in our store model could also materially adversely affect our ability to increase or maintain our sales and profitability.
The occurrence of severe weather events or natural disasters could significantly damage or destroy our retail locations, could prohibit
consumers from traveling to our retail locations, or could prevent us from resupplying our stores or distribution centers, especially during
the peak winter holiday shopping season.
If severe weather or a catastrophic natural event, such as a hurricane or earthquake, occurs in a particular region and damages or destroys a
significant number of our stores in that area, our sales could be materially adversely affected. In addition, if severe weather, such as heavy
snowfall or extreme temperatures, discourages or restricts customers in a particular region from traveling to our stores, our sales could
also be materially adversely affected. If severe weather occurs during the fourth quarter holiday season, the adverse effect on our sales and
gross profit could be even greater than at other times during the year because we generate a disproportionate amount of our sales and gross
profit during this period.
Failure to comply with, or the additional implementation of, laws, rules, and regulations regarding our business could materially adversely
affect our business and our results of operations and financial condition.
We are subject to various foreign, federal, state, and local laws, rules and regulations including, but not limited to, the
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Fair Labor Standards Act and ERISA, each as amended, and regulations promulgated by the Federal Trade Commission, SEC, Internal
Revenue Service, United States Department of Labor, Occupational Safety and Health Administration, and Environmental Protection
Agency. Failure to properly adhere to these and other applicable laws, rules and regulations could result in the imposition of penalties or
adverse legal judgments and could materially adversely affect our results of operations and financial condition. Similarly, the cost of
complying with newlyimplemented laws, rules and regulations could materially adversely affect our business and our results of
operations.
Risks associated with the suppliers from whom our raw materials and products are sourced could materially adversely affect our results of
operations and financial condition.
We utilize a large number of suppliers located in various parts of the world to obtain raw materials, private brand merchandise, and other
products. If any of our key vendors fail to supply us with products, we may not be able to meet the demands of our customers, and our
sales and profitability could be materially adversely affected.
We purchase a significant portion of our inventory from manufacturers located in China. Changes in trade regulations (including tariffs on
imports) could increase the cost of those items. Although our purchases are denominated in U.S. dollars, changes in the Chinese currency
exchange rate against the U.S. dollar or other foreign currencies could cause our vendors to increase the prices of items we purchase from
them. The occurrence of any of these events could materially adversely affect our results of operations.
Our ability to find qualified vendors that meet our standards and supply products in a timely and efficient manner is a significant
challenge, especially with respect to goods sourced from outside the United States. Merchandise quality issues, product safety concerns,
trade restrictions, difficulties in enforcing intellectual property rights in foreign countries, work stoppages, transportation capacity and
costs, tariffs, political or financial instability, foreign currency exchange rates, monetary, tax and fiscal policies, inflation, deflation,
outbreak of pandemics and other factors relating to foreign trade are beyond our control. These and other issues affecting our vendors
could materially adversely affect our sales and profitability.
Our business is heavily dependent upon information systems, which could result in higher maintenance costs and business disruption.
Our business is heavily dependent upon information systems, given the number of individual transactions we process each year. Our
information systems include an instore pointofsale system that helps us track sales performance, inventory replenishment, product
availability, product margin and customer information. In addition, we are in the process of upgrading our instore pointofsale system
and related processes. These systems are complex and require integration with each other, with some of our service providers, and with
our business processes, which may increase the risk of disruption.
Our information systems are also subject to damage or interruption from power outages, computer and telecommunications failures,
computer viruses, security breaches, catastrophic events and usage errors by our employees. If we encounter damage to our
systems, difficulty implementing new systems, or difficulty maintaining and upgrading current systems, our business operations could be
disrupted, our sales could decline, and our expenses could increase.
Failure to protect the integrity and security of our customersinformation could materially damage our standing with our customers and
expose us to litigation.
Increasing costs associated with information security including increased investments in technology, the costs of compliance with
consumer protection laws, and costs resulting from consumer fraud could materially adversely affect our results of operations.
Additionally, if a significant compromise in the security of our customer information, including personal identification data, were to
occur, it could materially adversely affect our reputation, results of operations, financial condition, and business operations and could
increase the costs we incur to protect against such security breaches.
We are subject to other litigation risks and may face liabilities as a result of allegations and negative publicity.
Our operations expose us to litigation risks, such as class action lawsuits involving employees, consumers and shareholders. For example,
from time to time putative class actions have been brought against us relating to various labor matters. Defending against lawsuits and
other proceedings may involve significant expense and divert managements attention and resources from other matters. In addition, if
any lawsuits were brought against us and resulted in a finding of substantial legal liability, it could cause significant reputational harm to
us and otherwise materially adversely affect our results of operations, financial condition, and business operations.
We conduct business outside the United States, which presents potential risks.
We have offices, assets, and generate a portion of our revenue in Mexico, China, including the special administrative region of Hong
Kong, and Taiwan. Part of
9
our growth strategy is to expand our international business because we believe the growth rates and the opportunity to implement
operating improvements may be greater than those typically achievable in the United States. International operations entail significant
risks and uncertainties, including, without limitation:
Economic, social and political instability in any particular country or region
Changes in currency exchange rates
Changes in government restrictions on converting currencies or repatriating funds
Changes in foreign laws and regulations or in trade, monetary or fiscal policies
High inflation and monetary fluctuations
Changes in restrictions on imports and exports
Difficulties in hiring, training and retaining qualified personnel, particularly finance and accounting personnel with U.S. GAAP
expertise
Inability to obtain access to fair and equitable political, regulatory, administrative and legal systems
Changes in government tax policy
Difficulties in enforcing our contractual rights or enforcing judgments or obtaining a just result in foreign jurisdictions
Potentially adverse tax consequences of operating in multiple jurisdictions
Any of these factors, by itself or in combination with others, could materially adversely affect our results of operations and financial
condition.
We may be unable to keep existing stores in current locations or open new stores in desirable locations, which could materially adversely
affect our sales and profitability.
We may be unable to keep existing stores in current locations or open new stores in desirable locations in the future. We compete with
other retailers and businesses for suitable locations for our stores. Local land use, local zoning issues, environmental regulations and other
regulations may affect our ability to find suitable locations and also influence the cost of leasing, building or buying our stores. We also
may have difficulty negotiating real estate leases and purchase agreements on acceptable terms. Further, to relocate or open new stores
successfully, we must hire and train employees for the new locations. Construction, environmental, zoning and real estate delays may
negatively affect store openings and increase costs and capital expenditures. In addition, when we open new stores in markets where we
already have a presence, our existing locations may experience a decline in sales as a result, and when we open stores in new markets, we
may encounter difficulties in attracting customers due to a lack of customer familiarity with our brand, our lack of familiarity with local
customer preferences, and seasonal differences in the market. We cannot be certain that new or relocated stores will produce the
anticipated sales or return on investment or that existing stores will not be materially adversely affected by new or expanded competition
in their market areas.
Terrorist activities and governmental efforts to thwart them could materially adversely affect our results of operations.
A terrorist attack or series of attacks on the United States could have a significant adverse effect on its economy. This downturn in the
economy could, in turn, materially adversely affect our results of operations. The potential for future terrorist attacks, the national and
international responses to terrorist attacks, and other acts of war or hostility could cause greater uncertainty and cause the economy to
suffer in ways that we cannot predict.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Information on our properties is located in our MD&A and financial statements included in this Annual Report on Form 10K and is
incorporated into this Item 2 by reference.
The following items are discussed further in the Notes to Consolidated Financial Statements:
Summary of Significant Accounting
Policies Property, Plant and
Equipment
Note 2
Supplemental Balance Sheet Disclosures
Property, Plant and Equipment
Note 3
Commitments and Contingencies Note 13
We lease, rather than own, most of our retail facilities. Our stores are located in shopping malls, standalone buildings and shopping
centers owned by other entities. We lease administrative offices throughout the United States and Mexico and one manufacturing plant in
China. We own the property on which our four distribution centers and two manufacturing facilities are located within the United States.
10
RETAIL LOCATIONS
The table below shows our retail locations at December 31, 2010, allocated among U.S. and Mexico companyoperated stores, kiosks and
dealer and other outlets.
Average
Store Size At December 31,
(Sq. Ft.) 2010 2009 2008
U.S. RadioShack companyoperated stores 2,482 4,486 4,476 4,453
Kiosks (1) (2) (3) 49 1,267 562 688
Mexico RadioShack companyoperated stores 1,289 211 204 200
Dealer and other outlets (4) N/A 1,219 1,321 1,411
Total number of retail locations (5) 7,183 6,563 6,752
(1) In April 2009 we agreed with Sprint to cease our arrangement to jointly operate the Sprintbranded kiosks in
operation at that date. This agreement allowed us to operate these kiosks under the Sprint name for a reasonable
period of time, allowing us to transition the kiosks to a new format. In August 2009, we transitioned these
kiosks to multiple wireless carrier RadioShackbranded locations. We managed and reported 111 of these
locations as extensions of existing RadioShack companyoperated stores located in the same shopping malls at
December 31, 2009.
(2) In February 2009, we signed a contract extension with Sams Club through March 31, 2011, with a transition
period ending June 30, 2011, to continue operating kiosks in certain Sams Club locations. As of December 31,
2010, we operated 417 of these kiosks. This transition will begin on April 1, 2011, and conclude on June 30,
2011, with the assignment to Sams Club of all kiosks operated by the Company in Sams Club stores. As part
of the terms of the contract, we assigned the operation of 22 and 66 kiosk locations to Sams Club in 2010 and
2009, respectively.
(3) In 2009 we conducted a test program of kiosk locations in approximately 100 Target stores. In the third quarter
of 2010 we signed a multiyear agreement with Target Corporation to operate wireless kiosks in certain Target
stores. In August 2010, we began to open Target Mobile kiosks with the objective of operating kiosks in the
majority of Target stores nationwide by mid2011. As of December 31, 2010, the Company operated 850
Target Mobile kiosks, and it expects to operate kiosks in approximately 1,450 Target stores by June 30, 2011.
(4) Our dealer and other outlets decreased by 102 and 90 locations, net of new openings, during 2010 and 2009,
respectively. These declines were primarily due to the closure of lower volume outlets.
(5) In 2010, the Company opened 871 retail locations and closed 251 retail locations. In 2009, the Company opened
202 retail locations and closed 391 retail locations. In 2008, the Company opened 131 retail locations, acquired
200 Mexico companyoperated stores, and closed 249 retail locations.
Real Estate Owned and Leased
Approximate Square Footage (in thousands)
At December 31,
2010 2009
Owned Leased Total Owned Leased Total
Retail
RadioShack companyoperated stores 2 11,133 11,135 10 11,209 11,219
Kiosks 62 62 43 43
Mexico companyoperated stores 272 272 263 263
Support Operations
Manufacturing 134 320 454 134 320 454
Distribution centers and office space 2,056 821 2,877 2,077 726 2,803
2,192 12,608 14,800 2,221 12,561 14,782
11
Below is a listing at December 31, 2010, of our retail locations within the United States and its territories:
U.S.
RadioShack
Stores
Kiosks Dealers
and Other*
Total
Alabama 49 11 30 90
Alaska 23 23
Arizona 76 24 100
Arkansas 26 3 38 67
California 552 236 39 827
Colorado 63 15 31 109
Connecticut 70 20 2 92
Delaware 19 1 20
Florida 302 35 28 365
Georgia 102 23 34 159
Hawaii 24 24
Idaho 19 15 34
Illinois 173 79 32 284
Indiana 98 36 40 174
Iowa 34 21 47 102
Kansas 37 15 26 78
Kentucky 54 5 36 95
Louisiana 67 20 17 104
Maine 22 7 12 41
Maryland 98 13 7 118
Massachusetts 114 31 5 150
Michigan 120 77 43 240
Minnesota 61 80 35 176
Mississippi 38 7 18 63
Missouri 71 30 52 153
Montana 7 27 34
Nebraska 20 11 20 51
Nevada 38 7 45
New Hampshire 32 12 5 49
New Jersey 160 41 6 207
New Mexico 31 5 14 50
New York 330 74 16 420
North Carolina 125 22 38 185
North Dakota 6 4 5 15
Ohio 188 38 27 253
Oklahoma 39 29 68
Oregon 52 20 72
Pennsylvania 211 53 24 288
Rhode Island 21 4 25
South Carolina 54 8 18 80
South Dakota 11 2 12 25
Tennessee 67 15 29 111
Texas 376 143 83 602
Utah 28 8 19 55
Vermont 9 8 17
Virginia 124 14 36 174
Washington 91 6 30 127
West Virginia 28 3 8 39
Wisconsin 70 38 45 153
Wyoming 6 1 16 23
District of Columbia 13 13
Puerto Rico 56 56
U.S. Virgin Islands 4 4
4,486 1,267 1,176 6,929
*Does not include international dealers.
12
ITEM 3. LEGAL PROCEEDINGS.
Refer to Note 13 Commitments and Contingenciesin the Notes to Consolidated Financial Statements included in this Annual Report
on Form 10K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's security holders during the fourth quarter of 2010.
EXECUTIVE OFFICERS OF THE REGISTRANT (SEE ITEM 10 OF PART III).
The following is a list, as of February 15, 2011, of our executive officers and their ages and positions.
Name
Position
(Date Appointed to Current Position)
Executive
Officer Since Age
Julian C. Day (1) Chief Executive Officer and Chairman of the Board (July 2006) 2006 58
James F. Gooch (1) President and Chief Financial Officer (January 2011) 2006 43
Lee D. Applbaum Executive Vice President Chief Marketing Officer (September
2008)
2008 40
Bryan E. Bevin (2) Executive Vice President Store Operations (January 2008) 2008 47
Scott E. Young Executive Vice President Chief Merchandise Officer (April
2010)
2010 49
Mary Ann Doran Senior Vice President Human Resources (June 2010) 2010 55
John G. Ripperton Senior Vice President Supply Chain (August 2006) 2006 57
Sharon S. Stufflebeme Senior Vice President Chief Information Officer (June 2009) 2009 49
Martin O. Moad Vice President and Controller (August 2007) 2007 54
(1) On January 24, 2011, the Company announced that Mr. Day plans to retire as Chairman of the Board of
Directors, Chief Executive Officer and a director of the Company effective at the Companys next annual
meeting of shareholders, currently scheduled to be held on May 19, 2011. In accordance with its succession
and transition plan, the Board of Directors named Mr. Gooch President of the Company effective January 24,
2011. Mr. Gooch will become Chief Executive Officer of the Company effective upon Mr. Days retirement.
Mr. Gooch will also be included in the Companys slate of nominees for election to the Board of Directors at
the next annual meeting of shareholders. The Board has also determined, as an enhancement to its governance
structure, to separate the chairman and CEO roles. If reelected, Daniel R. Feehan, the Boards current
presiding director and a member of the Companys Board since 2003, will become nonexecutive chairman
of the Board upon Mr. Days retirement. Mr. Feehan is president and chief executive officer of Cash America
International, Inc.
(2) Mr. Bevins last day with the Company will be March 4, 2011.
There are no family relationships among the executive officers listed, and there are no undisclosed arrangements or understandings under
which any of them were appointed as executive officers. All executive officers of RadioShack Corporation are appointed by the Board of
Directors to serve until their successors are appointed or until their death, resignation, retirement, or removal from office.
Mr. Day was appointed Chief Executive Officer and Chairman of the Board of RadioShack in July 2006. Prior to his appointment, Mr.
Day was a private investor. Mr. Day became the President and Chief Operating Officer of Kmart Corporation, a mass merchandising
company, in March 2002 and served as Chief Executive Officer of Kmart from January 2003 to October 2004. Following the merger of
Kmart and Sears, Roebuck and Co., a broadline retailer, Mr. Day served as a Director of Sears Holding Corporation (the parent company
of Sears, Roebuck and Co. and Kmart Corporation) until April 2006. Mr. Day joined Sears as Executive Vice President and Chief
Financial Officer in 1999, and was promoted to Chief Operating Officer and a member of the Office of the Chief Executive, where he
served until 2002.
Mr. Gooch was appointed Executive Vice President and Chief Financial Officer in August 2006. Previously, Mr. Gooch served as
Executive Vice President Chief Financial Officer of Entertainment Publications, LLC, a discount and promotions company, from May
2005 to August 2006. From 1996 to May 2005, Mr. Gooch served in various positions at Kmart Corporation, a mass merchandising
company, including Vice President, Controller and Treasurer, and Vice President, Corporate Financial Planning and Analysis.
Mr. Applbaum was appointed Executive Vice President and Chief Marketing Officer in September 2008. Previously, Mr. Applbaum was
Chief Marketing Officer for The Schottenstein Stores Corporation, a private retail holding company, from February 2007 until August
2008, and Senior Vice President and Chief Marketing Officer for David's Bridal Group, a national bridal retailer, from April 2004 until
February 2007. Prior to joining David's Bridal
13
Group, Mr. Applbaum served in various capacities for Footstar, Inc., a footwear retail holding company, from April 2000 until April 2004,
including Chief Marketing Officer of Footstar Athletic and Vice President of Marketing for Footaction USA.
Mr. Bevin was appointed Executive Vice President Store Operations in January 2008. Before joining RadioShack, Mr. Bevin was
Senior Vice President, U.S. Operations, for Blockbuster Entertainment, a media entertainment company, from January 2006 until October
2007, and Senior Vice President/General Manager Games from June 2005 until December 2005. Prior to joining Blockbuster, Mr.
Bevin was Vice President of Retail for Cingular, a wireless mobile communications provider, and Managing Director for Interactive
Telecom Solutions, a telecommunications management firm. On January 24, 2011, the Company announced Mr. Bevins departure.
Mr. Young was appointed Executive Vice President Chief Merchandise Officer in April 2010. Previously, Mr. Young served as
Divisional President and Chief Marketing Officer for LodgeNet, a media content delivery provider to guestbased businesses, where he
had worked since 2006. Before joining LodgeNet, he spent seven years at Best Buy Co., Inc. where he served as Vice President,
Merchandising; Vice President, BBY.com; and Vice President, Digital Entertainment. Earlier in his career, Mr. Young worked in the
entertainment and music industry for BMG Entertainment, Inc., Ticketmaster Entertainment, Inc. and EMI Group PLC also known as
Capitol Records.
Ms. Doran was appointed Senior Vice President Human Resources in June 2010. Previously, Ms. Doran served as Senior Vice
President of Human Resources for Zale Corp., a jewelry retailer, where she had worked since 1996. Ms. Dorans earlier experiences in
human resources also include The Bombay Company, Inc., a home furnishings retailer, and the Jordan Marsh Stores Corp., a regional
departmentstore chain that ultimately joined the Macys organization.
Mr. Ripperton was appointed Senior Vice President Supply Chain Management in August 2006. Mr. Ripperton joined RadioShack in
2000 and has served as Vice President Distribution, Division Vice President Distribution, Group General Manager, and Distribution
Center Manager. Prior to joining RadioShack, Mr. Ripperton served in the United States Navy for 25 years and retired with the rank of
Captain in the Navys Supply Corps.
Ms. Stufflebeme was appointed Senior Vice President Chief Information Officer in June 2009. Previously, Ms. Stufflebeme served as
Senior Vice President Chief Information Officer for 7Eleven, Inc. where she began working in 2004. Before working for 7Eleven,
Inc., she worked for Andersen Consulting, Hitachi Consulting and Michaels Stores, Inc.
Mr. Moad was appointed Vice President and Controller in August 2007. He has worked for RadioShack for more than 25 years, and has
served as Vice President and Treasurer, Vice President Investor Relations, Director Investor Relations, Vice President Controller
(InterTAN, Inc.), Vice President Assistant Secretary (InterTAN, Inc.), Assistant Secretary (InterTAN, Inc.), Controller International
Division, and Staff Accountant International Division. InterTAN, Inc. was an NYSElisted spinoff of RadioShacks international
units.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
PRICE RANGE OF COMMON STOCK
Our common stock is listed on the New York Stock Exchange and trades under the symbol "RSH." The following table presents the high
and low trading prices for our common stock, as reported in the composite transaction quotations of consolidated trading for issues on the
New York Stock Exchange, for each quarter in the two years ended December 31, 2010.
Quarter Ended High Low
Dividends
Declared
December 31, 2010 $23.38 $17.93 $0.25
September 30, 2010 23.16 17.87
June 30, 2010 24.00 17.70
March 31, 2010 23.91 18.55
December 31, 2009 $20.57 $14.82 $0.25
September 30, 2009 17.45 12.66
June 30, 2009 15.20 8.38
March 31, 2009 12.95 6.47
HOLDERS OF RECORD
At February 15, 2011, there were 17,530 holders of record of our common stock.
DIVIDENDS
The Board of Directors annually reviews our dividend policy. On November 4, 2010, our Board of Directors declared an annual dividend
of $0.25 per share. The dividend was paid on December 16, 2010, to stockholders of record on November 26, 2010.
14
PURCHASES OF EQUITY SECURITIES BY RADIOSHACK
The following table sets forth information concerning purchases made by or on behalf of RadioShack or any affiliated purchaser (as
defined in the SECs rules) of RadioShack common stock for the periods indicated.
Period
Total Number
of Shares
Purchased
Average
Price Paid
per Share
Total Number of
Shares Purchased
as
Part of Publicly
Announced Plans
or
Programs (1)
Approximate
Dollar Value of
Shares
That May Yet Be
Purchased Under
the Plans or
Programs (1) (2)
October 1 31, 2010 2,253 (3) $21.37 $200,000,000
November 1 30, 2010 8,099,464 (4) $20.15 (4) 8,099,464 (4) $101,407,710
December 1 31, 2010 $ $101,407,710
Total 8,101,717 8,099,464
(1)RadioShack announced a $200 million share repurchase program on July 24, 2008, which has no stated
expiration date. On August 20, 2009, we announced a $200 million increase in this share repurchase program. In
August 2010, our Board of Directors approved an increase in this share repurchase program from $400 million to
$610 million with $500 million available for share repurchases under this program. As of December 31, 2010,
$101.4 million of the total authorized amount was available for share repurchases under this program.
(2)During the period covered by this table, no publicly announced program expired or was terminated, and no
determination was made by RadioShack to suspend or cancel purchases under our program.
(3)Shares acquired by RadioShack for tax withholdings upon vesting of restricted stock awards, which were not
repurchased pursuant to a share repurchase program.
(4)In August 2010, we entered into an accelerated share repurchase program with two investment banks providing
for the repurchase of shares of our common stock under our approved share repurchase program. The accelerated
share repurchase program consisted of agreements to purchase shares of our common stock from the investment
banks for an aggregate purchase price of $300 million. This program concluded in November 2010. Total
aggregate shares delivered to us under the accelerated share repurchase program totaled 14.9 million shares at an
average purchase price of $20.18 per share, which is reflected in "Average Price Paid per Share" above. After
having received an initial delivery of 11.7 million shares in August 2010, we received 3.2 million additional
shares under the accelerated share repurchase program, which are presented under "Total Number of Shares
Purchased" and "Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs." In
addition, after the conclusion of the accelerated share repurchase program, we repurchased an additional $98.6
million worth of shares in the open market at an average price of $20.13 per share, representing 4.9 million
shares. For additional information regarding our common stock repurchases, see Note 6 Stockholders
Equityin Notes to Consolidated Financial Statements in this Annual Report on Form 10K.
15
RADIOSHACK STOCK COMPARATIVE PERFORMANCE GRAPH
The following stock performance graph and related information shall not be deemed soliciting materialor filedwith the SEC, nor
shall such information be incorporated by reference into any of our future filings under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that we specifically incorporate it by reference in the filing.
The graph below compares the cumulative total shareholder return on RadioShack common stock for the last five years with the
cumulative total return on the Standard & Poor's 500 Index, of which we are a component, and the Standard & Poor's Specialty Retail
Index, of which we are also a component. The S&P Specialty Retail Index is a capitalizationweighted index of domestic equities traded
on the NYSE and NASDAQ, and includes highcapitalization stocks representing the specialty retail sector of the S&P 500. The graph
assumes an investment of $100 at the close of trading on December 31, 2005, in RadioShack common stock, the S&P 500 Index and the
S&P Specialty Retail Index.
12/05 12/06 12/07 12/08 12/09 12/10
RadioShack Corporation $100.00 $80.95 $82.46 $59.97 $99.27 $95.36
S&P 500 Index 100.00 115.80 122.16 76.96 97.33 111.99
S&P Specialty Retail Index 100.00 106.47 90.83 68.31 95.14 114.91
* Cumulative Total Return assumes dividend reinvestment.
Information Source: Standard & Poor's, a division of The McGrawHill Companies Inc.
16
ITEM 6. SELECTED FINANCIAL DATA (UNAUDITED).
RADIOSHACK CORPORATION AND SUBSIDIARIES
Year Ended December 31,
(Dollars and shares in millions, except per share
amounts, ratios, locations and square footage) 2010 2009 2008 2007 2006 (4)
Statements of Income Data
Net sales and operating revenues $4,472.7 $4,276.0 $4,224.5 $4,251.7 $4,777.5
Operating income $375.4 $369.4 $322.2 $381.9 $156.9
Net income $206.1 $205.0 $189.4 $236.8 $73.4
Net income per share:
Basic $1.71 $1.63 $1.47 $1.76 $0.54
Diluted $1.68 $1.63 $1.47 $1.74 $0.54
Shares used in computing net income per share:
Basic 120.5 125.4 129.0 134.6 136.2
Diluted 122.7 126.1 129.1 135.9 136.2
Gross profit as a percent of sales 45.0 % 45.9 % 45.5 % 47.6 % 44.6 %
SG&A expense as a percent of sales 34.8 % 35.3 % 35.7 % 36.2 % 37.9 %
Operating income as a percent of sales 8.4 % 8.6 % 7.6 % 9.0 % 3.3 %
Balance Sheet Data
Inventories $723.7 $670.6 $636.3 $705.4 $752.1
Total assets $2,175.4 $2,429.3 $2,254.0 $1,989.6 $2,070.0
Working capital $870.6 $1,361.2 $1,154.4 $818.8 $615.4
Capital structure:
Current debt $308.0 $ $ $ $149.4
Longterm debt $331.8 $627.8 $659.5 $348.2 $345.8
Total debt $639.8 $627.8 $659.5 $348.2 $495.2
Cash and cash equivalents less total debt $(70.4 ) $280.4 $155.3 $161.5 $(23.2 )
Stockholders' equity $842.5 $1,048.3 $860.8 $769.7 $653.8
Total capitalization (1) $1,482.3 $1,676.1 $1,520.3 $1,117.9 $1,149.0
Longterm debt as a % of total capitalization (1) 22.4 % 37.5 % 43.4 % 31.1 % 30.1 %
Total debt as a % of total capitalization (1) 43.2 % 37.5 % 43.4 % 31.1 % 43.1 %
Book value per share at year end $7.97 $8.37 $6.88 $5.87 $4.81
Financial Ratios
Return on average stockholders' equity 20.3 % 21.5 % 22.9 % 33.2 % 11.8 %
Return on average assets 8.9 % 8.9 % 9.3 % 12.3 % 3.4 %
Annual inventory turnover 3.5 3.6 3.5 3.3 2.9
Other Data
Adjusted EBITDA (2) $459.6 $462.3 $421.3 $494.6 $285.1
Dividends declared per share $0.25 $0.25 $0.25 $0.25 $0.25
Capital expenditures $80.1 $81.0 $85.6 $45.3 $91.0
Number of retail locations at year end:
U.S. RadioShack companyoperated stores 4,486 4,476 4,453 4,447 4,467
Kiosks 1,267 562 688 739 772
Mexico RadioShack companyoperated stores 211 204 200
Dealer and other outlets 1,219 1,321 1,411 1,484 1,596
Total 7,183 6,563 6,752 6,670 6,835
Average square footage per U.S. RadioShack
companyoperated store 2,482 2,504 2,505 2,527 2,496
Comparable store sales increase (decrease) (3) 4.4 % 1.3 % (0.6 %) (8.2 %) (5.6 %)
Common shares outstanding 105.7 125.2 125.1 131.1 135.8
This table should be read in conjunction with our MD&A and the Consolidated Financial Statements and related Notes.
17
(1) Total capitalization is defined as total debt plus total stockholders' equity.
(2) Adjusted EBITDA, a nonGAAP financial measure, is defined as earnings before interest, taxes, depreciation
and amortization. Our calculation of adjusted EBITDA is also adjusted for other income or loss. The
comparable financial measure to adjusted EBITDA under GAAP is net income. Adjusted EBITDA is used by
management to evaluate the operating performance of our business for comparable periods and is a metric
used in the computation of annual cash bonuses and longterm cash incentives. Adjusted EBITDA should not
be used by investors or others as the sole basis for formulating investment decisions as it excludes a number of
important items. We compensate for this limitation by using GAAP financial measures as well in managing
our business. In the view of management, adjusted EBITDA is an important indicator of operating
performance because adjusted EBITDA excludes the effects of financing and investing activities by
eliminating the effects of interest and depreciation costs.
(3) Comparable store sales include the sales of U.S. and Mexico RadioShack companyoperated stores and kiosks
with more than 12 full months of recorded sales. Following their closure as Sprintbranded kiosks in August
2009, certain former Sprintbranded kiosk locations became multiple wireless carrier RadioShackbranded
locations. At December 31, 2009, we managed and reported 111 of these locations as extensions of existing
RadioShack companyoperated stores located in the same shopping malls. For purposes of calculating our
comparable store sales, we include sales from these locations for periods after they became extensions of
existing RadioShack companyoperated stores, but we do not include sales from these locations for periods
while they were operated as Sprintbranded kiosks.
(4) These amounts were affected by our 2006 restructuring program. For more information, please refer to our
Consolidated Financial Statements and related Notes included in our 2006 Annual Report on Form 10K.
The following table is a reconciliation of adjusted EBITDA to net income.
(In millions) 2010 2009 2008 2007 2006 (4)
Reconciliation of Adjusted EBITDA to Net Income
Adjusted EBITDA $459.6 $462.3 $421.3 $494.6 $285.1
Interest expense, net of interest income (39.3 ) (39.3 ) (20.3 ) (16.2 ) (36.9 )
Income tax expense (130.0 ) (123.5 ) (110.1 ) (129.8 ) (38.0 )
Depreciation and amortization (84.2 ) (92.9 ) (99.1 ) (112.7 ) (128.2 )
Other (loss) income (1.6 ) (2.4 ) 0.9 (8.6 )
Net income $206.1 $205.0 $189.4 $236.8 $73.4
18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(MD&A).
This MD&A section discusses our results of operations, liquidity and financial condition, risk management practices, critical accounting
policies, and estimates and certain factors that may affect our future results, including economic and industrywide factors. Our MD&A
should be read in conjunction with our consolidated financial statements and accompanying notes included in this Annual Report on Form
10K, as well as the Risk Factors set forth in Item 1A above.
EXECUTIVE OVERVIEW
RadioShack is a leading national retailer of mobile technology products and services, as well as products related to personal and home
technology and power supply needs. RadioShacks mobile technology products and services include wireless services from all major
national carriers. Each U.S. RadioShack companyoperated store and wireless kiosk offers services from at least three major national
carriers.
We have two reportable segments, U.S. RadioShack companyoperated stores and kiosks. The U.S. RadioShack companyoperated stores
segment consists solely of our 4,486 U.S. companyoperated retail stores, all operating under the RadioShack brand name in the United
States, Puerto Rico, and the U.S. Virgin Islands. Our U.S. RadioShack companyoperated stores offer a broad selection of relevant
technology products, including innovative mobile devices, accessories, and services, as well as items for personal and home technology
and power supply needs. The kiosks segment consists of our network of 1,267 kiosks located throughout the United States. These kiosks,
which are not RadioShackbranded, are primarily located in Target and Sams Club store locations. Our kiosk locations offer a wide
selection of mobile phones, accessories and related services. Our other operations include business activities that are not separately
reportable, which include sales to our independent dealers, sales to other third parties through our service centers, sales generated by our
www.radioshack.com website and our Mexican subsidiary, sales to commercial customers, and sales to other third parties through our
global sourcing and manufacturing operations.
Our more than 7,100 locations in the U.S. and Mexico give us a unique competitive advantage in scale, reach and convenience. We strive
to differentiate ourselves through an appealing store format, a comfortable store size, a carefully tailored product assortment, and
knowledgeable sales experts.
We believe RadioShack occupies unique advantages in the consumer electronics marketplace, providing an alternative to big box retailers:
We offer a broad selection of relevant technology products, including innovative mobile devices, accessories, and services, as well as
items for personal and home technology and power supply needs. Our lineup features leading national brands and wireless carriers, as
well as exclusive private brands.
We continue to capitalize on the growth of wireless communications and consumer demand for customerfriendly wireless service
plans and devices; our mobility assortment has been and will continue to be priced aggressively and is fully competitive with that of any
alternative retailer or carrier.
We believe we have sufficient financial strength.
We believe we are efficient operators and are a highmargin operation with a proven culture of cost control.
We have highly trained sales experts who offer friendly and personal service within an inviting, easytoshop store environment.
As with most other specialty retailers, our net sales and operating revenues, operating income and operating cash flows are greater during
the fourth quarter, which includes the majority of the holiday shopping season in the United States and Mexico.
External Factors Affecting Our Business
Since the fourth quarter of 2008 we have seen a highly challenging economy and muted consumer spending. However, the consumer
electronics industry, particularly the mobile phone industry, has experienced attractive growth rates over the past several years, driven by
product innovations and new services. The growth in mobile phones has been driven by growth in both the number of wireless subscribers
and an increase in smartphones, which represent the latest in mobile phone technology.
A smartphone is a mobile phone that offers more advanced computing ability and connectivity than a basic feature wireless phone.
Smartphones typically combine mobile phone capabilities with capabilities previously found on separate devices. Some examples include
GPS (global positioning system) navigation, memory players and camera capabilities. We believe this convergence of capabilities into
smartphones has contributed to a decline in several other product categories. This convergence trend is likely to continue as smartphones
evolve and as more consumers adopt smartphone technology.
19
According to the Consumer Electronics Association (CEA), sales of consumer electronics are expected to remain strong, growing by
more than 3% in 2011 to $186.4 billion due to the continued adoption of more portable digital products. In 2011, the CEA estimates that
smartphone revenues will increase nearly 20% to more than $21 billion.
The innovation in certain mature consumer electronic product categories, such as DVD players, camcorders and audio products, has not
been sufficient to maintain average selling prices. These mature products have become commoditized and have experienced price declines
and reduced margins.
Business Strategy and Performance
Our business strategy is focused around three specific goals:
Strengthen our financial position and flexibility
Improve the quality of our operations, especially customer service
Strengthen our product offering and revitalize and contemporize our brand
By taking a disciplined approach to cost control and focusing on profitable sales and the strength of our balance sheet, we have been able
to make substantial progress toward all three goals.
Over the past four years, we improved our margins, returned excess cash to shareholders through share repurchases, and controlled our
costs. At the same time, we continued to make operational improvements that reinforced our strategic themes of mobility, innovation, and
service. In the third quarter of 2009, we added TMobile as a third national wireless carrier to our RadioShackbranded stores,
positioning us to meet our customersdesire for multicarrier options and to develop more aggressively our position in the wireless
market. In addition, we launched our new brand platform The Shack that began to capture the attention of consumers and the
marketplace.
We have continued to invest in strategic initiatives to drive our longterm success, including:
Growing our wireless business by taking advantage of our multiple wireless carrier retail position, the strong product growth cycle, and
the growth in penetration of smartphones
Strengthening the offering in our nonwireless product platforms by improving our merchandising talent, transitioning to a more
productive product assortment, adding more national brands, and increasing exposure of these categories in targeted advertising and
marketing
Maximizing our dealer and franchise operations by increasing our wireless offerings through these channels and developing a consistent
brand experience
Partnering with other retailers such as Target to provide wireless service offerings in their stores
Improving our use of real estate and taking advantage of the current commercial real estate market by reevaluating our leases for
improved terms or reduced costs
Developing our international growth opportunities through our companyowned stores in Mexico
As previously disclosed, in February 2009 we signed a contract extension with Sams Club through March 31, 2011, with a transition
period ending June 30, 2011, to continue operating wireless kiosks in certain Sams Club stores. As of December 31, 2010, we operated
417 of these kiosks. Accordingly, this transition will begin on April 1, 2011, and conclude on June 30, 2011, with the assignment to
Sams Club of all kiosks operated by the Company in Sams Club stores.
In the third quarter of 2010 the Company signed a multiyear agreement with Target Corporation to operate wireless kiosks in certain
Target stores. In August 2010, we began to roll out Target Mobile kiosks, with the objective of operating kiosks in the majority of Target
stores nationwide by mid2011. As of December 31, 2010, the Company operated 850 Target Mobile kiosks, and it expects to operate
kiosks in approximately 1,450 Target stores by June 30, 2011.
Thus, the Sams Club transition coincides with the expansion of our kiosk program with Target. We expect a decline in kiosks segment
operating income reflecting the impact of ramping up the new Target Mobile kiosks and eliminating the Sams Club kiosks of
approximately $10 million to $15 million in fullyear 2011 compared to fullyear 2010, with growth in kiosks segment operating income
expected to resume in 2012 following completion of the Target Mobile kiosk rollout.
20
RESULTS OF OPERATIONS
2010 Summary
Net sales and operating revenues increased $196.7 million, or 4.6%, to $4,472.7 million when compared with last year. Comparable store
sales increased 4.4%. This increase was driven by increased sales in our Sprint and AT&T postpaid wireless business, increased sales of
prepaid wireless handsets and airtime, and increased sales of wireless accessories. These increases were partially offset by sales declines
in digitaltoanalog converter boxes, GPS products, netbooks, digital televisions and digital cameras. The inclusion of TMobile as a
postpaid wireless carrier increased sales for the first nine months of 2010; however, TMobile sales decreased in the fourth quarter, when
compared to the same period last year.
Gross margin decreased by 90 basis points from last year to 45.0%. Gross margin declined primarily due to a higher sales mix of lower
margin wireless handsets and incremental promotional and clearance markdowns associated with seasonal sellthrough and product
transitions in nonwireless platforms.
Selling, general and administrative (SG&A) expense increased $46.8 million when compared with last year. This increase was driven
by incentive compensation paid on increased wireless sales, additional employees to support our Target kiosk locations, and incremental
advertising expense related to brand building in the second quarter of 2010. As a percentage of net sales and operating revenues, SG&A
decreased by 50 basis points to 34.8%.
As a result of the factors above, operating income increased $6.0 million, or 1.6%, to $375.4 million when compared with last year.
Net income increased $1.1 million to $206.1 million when compared with last year. Net income per diluted share was $1.68 compared
with $1.63 last year.
Adjusted EBITDA decreased $2.7 million, or 0.6%, to $459.6 million when compared with last year.
2010 COMPARED WITH 2009
Wireless Service Provider Settlement Agreement
The business terms of our relationships with our wireless service providers are governed by our wireless reseller agreements. These
contracts are complex and include provisions determining our upfront commission revenue, net of chargebacks for wireless service
deactivations; our acquisition and return of wireless handsets; and, in some cases, future residual revenue, performance targets and
marketing development funds. Disputes occasionally arise between the parties regarding the interpretation of these contract provisions.
Certain disputes arose with one of the Companys wireless service providers pertaining to upfront commission revenue for activations
prior to July 1, 2010, and related chargebacks for wireless service deactivations. Negotiations regarding resolution of these disputes
culminated in the signing of a settlement agreement in July 2010. In connection with the decision to settle these disputes, the Company
considered the following: the timing of cash outflows and inflows in connection with the disputed upfront commission revenue and related
chargebacks, and the estimated future residual revenue; the benefits of settling the disputes and agreeing to enter into good faith
negotiations with the wireless service provider in the third quarter of 2010 to modify the commission and chargeback provisions of our
wireless reseller agreement; and the risks associated with the ultimate realization of the estimated future residual revenue.
Key elements of the settlement agreement include the following:
All disputes relating to upfront commission revenue for activations prior to July 1, 2010, and related chargebacks were settled.
The wireless service provider agreed to pay $141 million to the Company on or before July 30, 2010.
The Company and the wireless service provider agreed to enter into good faith negotiations in the third quarter of 2010 to modify the
commission and chargeback provisions of our wireless reseller agreement.
Beginning on July 1, 2010, the wireless service provider was no longer obligated to pay future residual revenue amounts to the
Company for a period of time for customers activated on or before June 30, 2010. For the first six months of 2010, these residual
revenue amounts averaged approximately $9 million per quarter. Based on this average, we would receive no residual revenue
payments from this wireless service provider for eight quarters beginning with the third quarter of 2010 under the terms of the
settlement agreement.
The effects of the settlement agreement have been reflected in net sales and operating revenues in the consolidated financial statements for
2010.
In the third quarter, we reached an agreement with this wireless service provider to modify the commission and chargeback provisions of
our wireless reseller agreement. Based on the terms of the settlement agreement, the terms of the amended wireless reseller agreement,
and the performance of our business with this wireless service
21
provider, we do not believe that these events will have a material effect on our results of operations for future periods.
Net Sales and Operating Revenues
Consolidated net sales increased 4.6% or $196.7 million to $4,472.7 million for the year ended December 31, 2010, compared with
$4,276.0 million in 2009. This increase was primarily due to a comparable store sales increase of 4.4% in 2010. The increase in
comparable store sales was driven primarily by increased sales in our wireless platform, but was partially offset by decreased sales in our
accessory, modern home and personal electronics platforms.
Consolidated net sales and operating revenues for our two reportable segments and other sales are as follows:
(In millions) 2010 2009 2008
U.S. RadioShack companyoperated stores $3,808.2 $3,650.9 $3,611.1
Kiosks 271.6 250.0 283.5
Other (1) 392.9 375.1 329.9
Consolidated net sales and operating revenues $4,472.7 $4,276.0 $4,224.5
Consolidated net sales and operating revenues increase (decrease) 4.6 % 1.2 % (0.6 %)
Comparable store sales increase (decrease) (2) 4.4 % 1.3 % (0.6 %)
(1)Net sales and operating revenues for 2010 and 2009
include the consolidation of our Mexican subsidiary.
(2)Comparable store sales include the sales of U.S. and
Mexico RadioShack companyoperated stores as
well as kiosks with more than 12 full months of
recorded sales. Following their closure as
Sprintbranded kiosks in August 2009, certain
former Sprintbranded kiosk locations became
multiple wireless carrier RadioShackbranded
locations. At December 31, 2009, we managed and
reported 111 of these locations as extensions of
existing RadioShack companyoperated stores
located in the same shopping malls. For purposes of
calculating our comparable store sales, we include
sales from these locations for periods after they
became extensions of existing RadioShack
companyoperated stores, but we do not include
sales from these locations for periods while they
were operated as Sprintbranded kiosks.
The following table provides a summary of our consolidated net sales and operating revenues by platform and as a percent of net sales and
operating revenues. These consolidated platform sales include sales from our U.S. RadioShack companyoperated stores and kiosks, as
well as other sales.
Consolidated Net Sales and Operating Revenues
(In millions) 2010 2009 2008
Wireless $2,128.2 47.6 % $1,634.3 38.2 % $1,388.5 32.9 %
Accessory (1) 858.2 19.2 1,036.3 24.2 1,140.0 27.0
Modern home 516.6 11.5 585.3 13.7 556.8 13.2
Personal electronics 412.5 9.2 463.6 10.9 565.4 13.4
Power 222.0 5.0 225.3 5.3 243.1 5.7
Technical 179.5 4.0 181.3 4.2 184.5 4.4
Service 130.3 2.9 114.5 2.7 93.8 2.2
Other sales (2) 25.4 0.6 35.4 0.8 52.4 1.2
Consolidated net sales and operating
revenues $4,472.7 100.0 % $4,276.0 100.0 % $4,224.5 100.0 %
(1) The sales decrease from 2009 to 2010 in the accessory platform includes a decrease in sales of digital
converter boxes. Consolidated sales of converter boxes were $33.7 million and $170.1 million in 2010 and
2009, respectively.
(2) Other sales include outside sales from repair services and outside sales of our global sourcing operations and
domestic and overseas manufacturing facilities.
22
U.S. RadioShack CompanyOperated Stores Segment
The following table provides a summary of our net sales and operating revenues by platform and as a percent of net sales and operating
revenues for the U.S. RadioShack companyoperated stores segment.
(In millions) 2010 2009 2008
Wireless $1,784.0 46.8 % $1,342.1 36.8 % $1,070.7 29.7 %
Accessory 773.6 20.3 946.0 25.9 1,054.0 29.2
Modern home 421.3 11.1 489.8 13.4 483.7 13.4
Power 198.9 5.2 204.7 5.6 227.3 6.3
Technical 164.6 4.3 167.3 4.6 170.9 4.7
Service 117.6 3.1 107.6 2.9 91.4 2.5
Other 11.2 0.3 2.3 0.1 9.2 0.2
Net sales and operating revenues $3,808.2 100.0 % $3,650.9 100.0 % $3,611.1 100.0 %
Sales in our wireless platform (includes postpaid and prepaid wireless handsets, commissions, residual income and communication
devices such as scanners and GPS products) increased 32.9% in 2010. This sales increase was driven by increased sales in our Sprint and
AT&T postpaid wireless business and increased sales of prepaid wireless handsets. These increases were partially offset by decreased
sales of GPS products. The inclusion of TMobile as a postpaid wireless carrier increased sales for the first nine months of 2010;
however, TMobile sales decreased in the fourth quarter, when compared to the same period last year.
Sales in our accessory platform (includes home entertainment, wireless, music, computer and video game accessories; media storage;
power adapters; digital imaging products and headphones) decreased 18.2% in 2010. This sales decrease was primarily driven by
decreased sales of digital converter boxes and television antennas, but was partially offset by increased sales of wireless accessories.
Consolidated sales of converter boxes were $33.7 million and $170.1 million in 2010 and 2009, respectively. Converter box sales have
decreased since the transition to digital television occurred in June 2009. We expect sales of converter boxes to be minimal in 2011.
Sales in our modern home platform (includes home audio and video endproducts, personal computing products, and residential
telephones) decreased 14.0% in 2010. This decrease was driven primarily by decreased sales of digital televisions and netbooks, but was
partially offset by increased sales of laptops.
Sales in our personal electronics platform (includes digital cameras, digital music players, toys, satellite radios, video gaming hardware,
camcorders, and general radios) decreased 13.8% in 2010. This decrease was driven by sales declines in substantially all categories in this
platform.
Sales in our power platform (includes general and special purpose batteries and battery chargers) decreased 2.8% in 2010. This decrease
was primarily driven by decreased sales of both general and special purpose batteries, but was partially offset by increased sales of battery
chargers.
Sales in our technical platform (includes wire and cable, connectivity products, components and tools, and hobby products) decreased
1.6% in 2010. This decrease was driven by decreased sales of connectivity products.
Sales in our service platform (includes prepaid wireless airtime, extended service plans, and bill payment revenue) increased 9.3% in
2010. This increase was driven primarily by increased sales of prepaid wireless airtime.
Kiosks Segment
Kiosk sales consist primarily of handset sales, postpaid and prepaid commission revenue and related wireless accessory sales. Kiosk sales
increased 8.6% or $21.6 million in 2010. This increase was driven primarily by new sales in our Target kiosks and increased sales in our
Sams Club kiosks, but was partially offset by the closure of our Sprintbranded kiosk business. We closed our Sprintbranded kiosks in
the third quarter of 2009.
As previously disclosed, in February 2009 we signed a contract extension with Sams Club through March 31, 2011, with a transition
period ending June 30, 2011, to continue operating wireless kiosks in certain Sams Club stores. As of December 31, 2010, we operated
417 of these kiosks. Accordingly, this transition will begin on April 1, 2011, and conclude on June 30, 2011, with the assignment to
Sams Club of all kiosks operated by the Company in Sams Club stores.
23
Other Sales
Other sales include sales to our independent dealers, outside sales through our service centers, sales generated by our
www.radioshack.com website and our Mexican subsidiary, sales to commercial customers, and outside sales of our global sourcing
operations and manufacturing. Other sales increased $17.8 million or 4.7% in 2010. This sales increase was driven primarily by increased
sales at our Mexican subsidiary and increased sales to our independent dealers, but was partially offset by decreased sales from
www.radioshack.com and our global sourcing and manufacturing operations. Our Mexican subsidiary accounted for less than 5% of
consolidated net sales and operating revenues in 2010.
Gross Profit
Consolidated gross profit and gross margin are as follows:
(In millions) 2010 2009 2008
Gross profit $2,010.6 $1,962.5 $1,922.7
Gross profit increase (decrease) 2.5 % 2.1 % (5.1 %)
Gross margin 45.0 % 45.9 % 45.5 %
Consolidated gross profit and gross margin for 2010 were $2,010.6 million and 45.0%, respectively, compared with $1,962.5 million and
45.9%, respectively, in 2009, resulting in a 2.5% increase in gross profit dollars and a 90 basis point decrease in our gross margin.
The increase in gross profit dollars was primarily due to increased sales, but was partially offset by decreased gross margin. Gross margin
declined primarily due to a higher sales mix of lower margin wireless handsets and incremental promotional and clearance markdowns
associated with seasonal sellthrough and product transitions in nonwireless platforms.
Selling, General and Administrative Expense
Our consolidated SG&A expense increased 3.1% or $46.8 million in 2010. This represents a 50 basis point decrease as a percentage of net
sales and operating revenues compared to 2009.
The table below summarizes the breakdown of various components of our consolidated SG&A expense and its related percentage of total
net sales and operating revenues.
2010 2009 2008
Dollars
% of
Sales &
Revenues Dollars
% of
Sales &
Revenues Dollars
% of
Sales &
Revenues (In millions)
Compensation $700.6 15.7 % $655.7 15.3 % $617.5 14.6 %
Rent and occupancy 288.3 6.4 289.7 6.8 292.6 6.9
Advertising 206.1 4.6 193.0 4.5 214.5 5.1
Other taxes (excludes income taxes) 101.8 2.3 102.0 2.4 87.9 2.1
Utilities 54.7 1.2 55.3 1.3 58.7 1.4
Insurance 48.8 1.1 47.5 1.1 55.0 1.3
Credit card fees 35.6 0.8 37.7 0.9 37.7 0.9
Professional fees 21.4 0.5 23.9 0.6 23.7 0.6
Repairs and maintenance 20.2 0.5 22.3 0.5 19.5 0.5
Licenses 13.2 0.3 11.5 0.3 12.4 0.3
Printing, postage and office supplies 7.5 0.2 8.1 0.2 8.1 0.2
Matching contributions to savings
plans 5.6 0.1 6.0 0.1 6.5 0.2
Recruiting, training & employee
relations 5.7 0.1 6.0 0.1 7.5 0.2
Travel 5.4 0.1 4.6 0.1 5.4 0.1
Warranty and product repair 2.2 2.7 0.1 4.2 0.1
Other 37.6 0.9 41.9 1.0 58.6 1.2
$1,554.7 34.8 % $1,507.9 35.3 % $1,509.8 35.7 %
24
Compensation expense increased in dollars and as a percentage of net sales and operating revenues. This increase was driven by incentive
compensation paid on increased wireless sales and the hiring of additional employees to support our Target kiosk locations.
Advertising expense was higher in 2010 primarily due to incremental advertising related to brand building in the second quarter of 2010.
Depreciation and Amortization
The table below provides a summary of our total depreciation and amortization by segment.
(In millions) 2010 2009 2008
U.S. RadioShack companyoperated stores $45.4 $45.8 $52.9
Kiosks 2.3 3.2 5.8
Other 3.7 5.8 1.8
Unallocated 32.8 38.1 38.6
Total depreciation and amortization $84.2 $92.9 $99.1
The table below provides an analysis of total depreciation and amortization.
(In millions) 2010 2009 2008
Depreciation and amortization expense $76.5 $83.7 $87.9
Depreciation and amortization included in cost of products sold 7.7 9.2 11.2
Total depreciation and amortization $84.2 $92.9 $99.1
Total depreciation and amortization for 2010 declined $8.7 million or 9.4%. Our depreciation expense has been trending lower over the
past five years due to our lower level of capital expenditures during this time compared with a higher level of capital expenditures in 2005
and prior years.
Impairment of LongLived Assets
Impairment of longlived assets was $4.0 million and $1.5 million in 2010 and 2009, respectively. In 2010, this amount was related
primarily to underperforming U.S. RadioShack companyoperated stores and certain test store formats. In 2009, these amounts were
related primarily to underperforming U.S. RadioShack companyoperated stores and kiosk locations.
Net Interest Expense
Consolidated net interest expense, which is interest expense net of interest income, was $ 39.3 million in both 2010 and 2009.
In 2010, interest expense primarily consisted of interest paid at the stated coupon rate on our outstanding notes, the noncash amortization
of the discount on our convertible notes, cash received on our interest rate swaps, and the noncash change in fair value of our interest rate
swaps. Interest expense decreased $2.2 million in 2010. This decrease was primarily driven by the reduced principal balance of our
longterm notes due in May 2011 resulting from the September 2009 repurchase of $43.2 million of the principal amount of our notes and
increased payments received on our interest rate swap contracts during 2010. Noncash interest expense was $15.2 million in 2010
compared with $13.7 million in 2009.
Interest income decreased $2.2 million in 2010. This decrease was primarily due to lower average cash balances in the second half of
2010.
Income Tax Expense
Our effective tax rate for 2010 was 38.7%, compared with 37.6% for 2009. The 2010 effective tax rate was affected by the net reversal of
approximately $1.2 million in previously unrecognized tax benefits, deferred tax assets and accrued interest due to the effective settlement
of state income tax matters during the period. These discrete items lowered the effective tax rate by 0.4 percentage points.
The 2009 effective tax rate was affected by the net reversal of approximately $6.1 million in previously unrecognized tax benefits,
deferred tax assets and accrued interest due to the effective settlement of state income tax matters during the period. These discrete items
lowered the effective tax rate by 1.9 percentage points.
2009 COMPARED WITH 2008
Consolidated net sales increased 1.2% or $51.5 million to $4,276.0 million for the year ended December 31, 2009, compared with
$4,224.5 million in 2008. This increase was primarily due to a comparable store sales increase of 1.3% in 2009. The increase in
comparable store sales was driven primarily by increased sales in our wireless and modern home platforms, but was partially offset by
decreased sales in our accessory and personal electronics platforms.
U.S. RadioShack CompanyOperated Stores Segment
Sales in our wireless platform increased 25.3% in 2009. This sales increase was driven by increased sales in our Sprint postpaid wireless
business, the addition of TMobile as a postpaid wireless carrier, and increased sales of prepaid wireless handsets. These increases were
partially offset by decreased sales of GPS products.
Sales in our accessory platform decreased 10.2% in 2009. This sales decrease was primarily driven by decreased
25
sales in digitaltoanalog converter boxes, wireless accessories, imaging accessories, and media storage, but was partially offset by
increased sales of television antennas. Consolidated sales of converter boxes were $170.1 million and $204.8 million in 2009 and 2008,
respectively. The decrease in converter box sales occurred in the second half of the year after the transition to digital television occurred in
June 2009.
Sales in our modern home platform increased 1.3% in 2009. In this platform we recorded sales gains in netbooks, digital televisions, and
VoIP products, which were substantially offset by sales declines in laptops, residential telephones, and DVD players.
Sales in our personal electronics platform decreased 22.4% in 2009. This decrease was driven primarily by sales declines in digital
cameras, digital music players, video game consoles, satellite radios, and toys.
Sales in our power platform decreased 9.9% in 2009. This decrease was primarily driven by decreased sales of both general and special
purpose batteries. Our sales performance in this platform was negatively affected by the disruption during the transition process of the
assortment to our Enercell brand.
Sales in our technical platform decreased 2.1% in 2009. We recorded an increase in sales of wire and cable products, which was more than
offset by decreased sales across most of the other product categories in this platform.
Sales in our service platform increased 17.7% in 2009. This increase was driven primarily by increased sales of prepaid wireless airtime
and extended service plans.
Kiosks Segment
Kiosk sales decreased 11.8% or $33.5 million in 2009. We realized a sales increase in our Sams Club business, which was offset by a
reduced number of kiosk locations. This decrease in locations was partially due to the closure of underperforming Sprintbranded kiosk
locations in the first half of 2009 and the closure of the remainder of our Sprintbranded kiosks in the third quarter. For more information
regarding the reduction in kiosk outlets, see the Retail Locations table in Item 2 Propertiesin this Annual Report on Form 10K.
Other Sales
Other sales increased $45.2 million or 13.7% in 2009. This sales increase was primarily attributable to the consolidation of our Mexican
subsidiary for all of 2009, but was partially offset by decreased sales to our independent dealers. Our Mexican subsidiary accounted for
less than 5% of consolidated net sales and operating revenues in 2009.
Gross Profit
Consolidated gross profit and gross margin for 2009 were $1,962.5 million and 45.9%, respectively, compared with $1,922.7 million and
45.5% in 2008, resulting in a 2.1% increase in gross profit dollars and a 40 basis point increase in our gross margin.
The improvement in gross margin was partially driven by improved product mix, combined with fewer markdowns as a result of more
effective promotional productivity, inventory management and higher sellthrough of seasonal products.
Selling, General and Administrative Expense
Our consolidated SG&A expense decreased 0.1% or $1.9 million in 2009. This represents a 40 basis point decrease as a percentage of net
sales and operating revenues compared to 2008.
Compensation expense increased in dollars and as a percentage of net sales and operating revenues. This increase was driven by more
incentive compensation and the consolidation of our Mexican subsidiary for all of 2009.
Total rent and occupancy expense decreased from 2008. This decrease was primarily driven by reduced rent related to our amended
headquarters lease and the closing of our Sprintbranded kiosks. These decreases were partially offset by the consolidation of our
Mexican subsidiary for all of 2009.
Advertising expense decreased in 2009 primarily due to reduced spending in the second quarter of the year. While our advertising expense
in the second half of the year was consistent with the same period last year, we shifted a significant portion of our advertising expenditures
from product specific promotional activities to building awareness of our new brand creative platform, The Shack.
The increase in other taxes was partially driven by increased payroll taxes associated with increased compensation expense. Additionally,
we recorded an $8.2 million sales and use tax benefit from the settlement of a sales tax issue in 2008.
Our insurance expense has decreased in recent years due to lower workerscompensation costs. This has been the result of better claims
experience during this time.
The decrease in other SG&A expense was primarily due to a $12.1 million noncash charge recorded in connection with our amended
headquarters lease in 2008.
Depreciation and Amortization
Total depreciation and amortization for 2009 declined $6.2 million or 6.3%. This decrease was primarily due to reduced capital
expenditures in recent years when compared with prior years.
26
Impairment of LongLived Assets
Impairment of longlived assets was $1.5 million and $2.8 million for 2009 and 2008, respectively. These amounts were related primarily
to underperforming U.S. RadioShack companyoperated stores and kiosk locations.
Net Interest Expense
Consolidated net interest expense, which is interest expense net of interest income, was $39.3 million for 2009 compared with $20.3
million for 2008.
Interest expense primarily consists of interest paid on the stated coupon rate for our outstanding bonds, the noncash amortization of
discounts and premiums on our outstanding bonds, cash paid or received on our interest rate swaps, and the noncash change in fair value
of our interest rate swaps in 2009. Interest expense increased $9.2 million in 2009. This increase was primarily driven by increased
interest expense related to our 2013 convertible notes. These notes were outstanding for twelve months in 2009 and four months in 2008.
This increase was partially offset by increased payments received on our interest rate swap contracts in 2009 and the repurchase of $43.2
million of our notes due in May 2011. Noncash interest expense was $13.7 million in 2009 compared with $5.0 million in 2008.
Interest income decreased $9.8 million in 2009. This decrease was due to a lower interest rate environment in 2009, but was partially
offset by larger average cash balances in 2009.
Other Loss
During 2009 we recorded other loss of $1.6 million compared with other loss of $2.4 million in 2008. The 2009 loss was recognized in
conjunction with the repurchase of a portion of our 2011 Notes. The 2008 loss represented losses related to our derivative exposure to
Sirius XM Radio, Inc. warrants as a result of our fair value measurements of these warrants. At December 31, 2008, the fair value of these
warrants was zero, and these warrants expired in the first quarter of 2009.
Income Tax Expense
Our effective tax rate for 2009 was 37.6% compared with 36.8% for 2008. The 2009 effective tax rate was affected by the net reversal of
approximately $6.1 million in previously unrecognized tax benefits, deferred tax assets and accrued interest due to the effective settlement
of state income tax matters during the period. These discrete items lowered the effective tax rate by 1.9 percentage points.
The 2008 effective tax rate was affected by the execution of a closing agreement with respect to a Puerto Rico income tax matter during
the year, which resulted in a credit to income tax expense; this discrete item lowered the effective tax rate for 2008 by 1.0 percentage
point. In addition, the 2008 effective tax rate was affected by the net reversal of approximately $4.1 million in unrecognized tax benefits,
deferred tax assets and accrued interest related to the settlement of various state income tax matters and the expiration of the statute of
limitations with respect to our 2002 taxable year; this net reversal lowered the effective tax rate for 2008 by 1.4 percentage points.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Refer to Note 2 Summary of Significant Accounting Policiesunder the section titled New Accounting Standardsin the Notes to
Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow Overview
Operating Activities: Cash provided by operating activities in 2010 was $155.0 million, compared with $245.8 million in 2009. Cash
flows from operating activities are comprised of net income plus noncash adjustments to net income and working capital components.
Cash provided by net income plus noncash adjustments to net income was $343.9 million and $333.7 million in 2010 and 2009,
respectively. Cash used in working capital components was $188.9 million and $87.9 million in 2010 and 2009, respectively. Our cash
used in working capital components in 2010 was driven by higher accounts receivable and inventory balances to support our increased
wireless business and our Target kiosk expansion. Cash used in working capital components in 2010 was also driven by lower accrued
expenses and current liabilities related to insurance, legal reserves and compensation.
Investing Activities: Cash used in investing activities was $80.0 million and $80.8 million in 2010 and 2009, respectively. Capital
expenditures of $80.1 million in 2010 were consistent with last year. Capital expenditures primarily related to information system projects,
Target Mobile kiosks, and our U.S. RadioShack companyoperated stores.
Financing Activities: Net cash used in financing activities was $413.8 million in 2010 compared with $71.6 million in 2009. This increase
was primarily driven by the repurchase of $398.8 million of our common stock in 2010 under our share repurchase program, compared
with no repurchases in 2009.
Free Cash Flow: Our free cash flow, defined as cash flows from operating activities less dividends paid and additions to property, plant
and equipment, was $48.4 million in 2010, $133.5 million in 2009, and $157.7 million in 2008. The decrease in free cash flow for 2010
was attributable to decreased cash flow from operating activities as described above.
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We believe free cash flow is a relevant indicator of our ability to repay maturing debt, change dividend payments or fund other uses of
capital that management believes will enhance shareholder value. The comparable financial measure to free cash flow under generally
accepted accounting principles is cash flows from operating activities, which was $155.0 million in 2010, $245.8 million in 2009, and
$274.6 million in 2008. We do not intend for the presentation of free cash flow, a nonGAAP financial measure, to be considered in
isolation or as a substitute for measures prepared in accordance with GAAP, nor do we intend to imply that free cash flow represents cash
flow available for discretionary expenditures.
The following table is a reconciliation of cash flows from operating activities to free cash flow.
(In millions) 2010 2009 2008
Net cash provided by operating activities $155.0 $245.8 $274.6
Less:
Additions to property, plant and equipment 80.1 81.0 85.6
Dividends paid 26.5 31.3 31.3
Free cash flow $48.4 $133.5 $157.7
SOURCES OF LIQUIDITY
As of December 31, 2010, we had $569.4 million in cash and cash equivalents. We believe that our cash flows from operations and
available cash and cash equivalents will adequately fund our operations, our capital expenditures, and our maturing debt obligations.
Additionally, we had a credit facility of $325 million.
On January 4, 2011, we terminated this credit facility and entered into a new fiveyear, $450 million revolving credit agreement (016
Credit Facility) with a group of lenders with Bank of America, N.A., as administrative agent.
As a condition of the 2016 Credit Facility, we were required to eliminate the restrictive covenants associated with our longterm notes due
May 15, 2011 (as further defined below, the 011 Notes). On January 4, 2011, we transferred $318.1 million to the trustee for the 2011
Notes that will be used to pay principal and interest amounts due upon redemption of these notes. In connection with the deposit of these
funds, the trustee acknowledged the satisfaction and discharge of the indenture as to the 2011 Notes, which had the effect of eliminating
the restrictive covenants referred to above. This redemption is currently scheduled to take place on March 4, 2011. Any amounts
remaining with the trustee after the redemption of the 2011 Notes will be returned to us.
The table below lists our credit commitments from various financial institutions at December 31, 2010.
(In millions) Commitment Expiration per Period
Credit Commitments
Total
Amounts
Committed
Less Than
1 Year 13 Years 35 Years
Over
5 Years
Lines of credit (1) $325.0 $325.0 $ $ $
Standby letters of credit
Total commercial commitments $325.0 $325.0 $ $ $
(1) On January 4, 2011, we replaced this credit facility with a new fiveyear, $450 million credit facility. See the
Available Financingsection below for more information.
Available Financing: As of December 31, 2010, we had $292.3 million in borrowing capacity available under our existing credit facility.
We did not borrow under this facility during 2010, but we did arrange for the issuance of standby letters of credit totaling $32.7 million
under the facility. This credit facility had customary terms and covenants, and we were in compliance with these covenants at December
31, 2010. The facility was scheduled to expire in May of 2011.
The 2016 Credit Facility expires on January 4, 2016. The new facility may be used for general corporate purposes and the issuance of
letters of credit. The new facility is secured by substantially all of the Companys inventory, accounts receivable, cash and cash
equivalents, and certain other personal property.
Borrowings under the 2016 Credit Facility are subject to a borrowing base of certain secured assets and bear interest, at our option, at a
banks prime rate plus 1.25% to 1.75% or LIBOR plus 2.25% to 2.75%. The applicable rates in these ranges are based on the aggregate
average availability under the facility.
The 2016 Credit Facility also contains a $150 million sublimit for the issuance of standby and commercial letters of credit. Issued letters
of credit will reduce the amount available under the facility. Letter of credit fees are 2.25%
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to 2.75% for standby letters of credit or 1.125% to 1.375% for commercial letters of credit.
We pay commitment fees to the lenders at an annual rate of 0.50% of the unused amount of the facility. No borrowings, other than the
issuance of letters of credit totaling $32.8 million as of February 15, 2011, have been made under the 2016 Credit Facility.
The 2016 Credit Facility contains affirmative and negative covenants that, among other things, restrict certain payments, including
dividends and share repurchases. Also, we will be subject to a minimum consolidated fixed charge coverage ratio if our unused amount
under the facility is less than the greater of 12.5% of the maximum borrowing amount and $45.0 million.
We are generally free to pay dividends and repurchase shares as long as the current and projected unused amount under the facility is
greater than 17.5% of the maximum borrowing amount and the minimum consolidated fixed charge coverage ratio is maintained. We may
pay dividends and repurchase shares without regard to the Company's consolidated fixed charge coverage ratio as long as the current and
projected unused amount under the facility is greater than 75% of the maximum borrowing amount and cash on hand is used for the
dividends or share repurchases.
CASH REQUIREMENTS
Capital Expenditures: We anticipate that our capital expenditure requirements for 2011 will range from $100 million to $125 million. The
nature of our capital expenditures is comprised of a base level of investment required to support our current operations and a discretionary
amount related to our strategic initiatives. The base level of capital expenditures required to support our operations ranges from $40
million to $60 million. The remaining amount of anticipated capital expenditures relates to strategic initiatives as reflected in our annual
plan. These capital expenditures are discretionary and, therefore, may not be spent if we decide not to pursue one or more of our strategic
initiatives. U.S. RadioShack companyoperated store remodels and relocations, Target kiosks, and information systems projects will
account for the majority of our anticipated 2011 capital expenditures. Cash and cash equivalents and cash generated from operating
activities will be used to fund future capital expenditure needs.
Seasonal Inventory Buildup: Typically, our annual cash requirements for preseasonal inventory buildup range between $150 million and
$250 million. The funding required for this buildup comes primarily from cash on hand and cash generated from net sales and operating
revenues. Additionally, our 2016 Credit Facility could be utilized to fund the inventory buildup.
Contractual Obligations
The table below contains our known contractual commitments as of December 31, 2010.
(In millions) Payments Due by Period
Contractual Obligations
Total
Amounts
Committed
Less Than
1 Year 13 Years 35 Years
Over
5 Years
Longterm debt obligations (1) $682.8 $306.8 $375.0 $1.0 $
Interest obligations 32.7 17.8 14.9
Operating lease obligations (2) 562.9 196.7 233.8 99.2 33.2
Purchase obligations (3) 291.8 268.4 19.4 4.0
Other longterm liabilities reflected on the balance
sheet (4) 93.0 27.6 6.5 22.3
Total $1,663.2 $789.7 $670.7 $110.7 $55.5
(1) For more information regarding longterm debt, refer to Note 5 Indebtedness and Borrowing Facilitiesof
our Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10K.
(2) For more information regarding lease commitments, refer to Note 13 Commitments and Contingenciesof
our Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10K.
(3) Purchase obligations include our product commitments, marketing agreements and freight commitments.
(4) Includes a $36.6 million liability for unrecognized tax benefits. We are not able to reasonably estimate the
timing of the payments or the amount by which the liability will increase or decrease over time; therefore, the
related balances have not been reflected in the Payments Due by Periodsection of the table.
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2013 Convertible Notes: In August 2008, we issued $375 million principal amount of convertible senior notes due August 1, 2013 (the
013 Convertible Notes), in a private offering. Each $1,000 of principal of the 2013 Convertible Notes is initially convertible, under
certain circumstances, into 41.2414 shares of our common stock (or a total of approximately 15.5 million shares), which is the equivalent
of $24.25 per share, subject to adjustment upon the occurrence of specified events set forth under terms of the 2013 Convertible Notes.
Upon conversion, we would pay the holder the cash value of the applicable number of shares of our common stock, up to the principal
amount of the note. Amounts in excess of the principal amount, if any, (the excess conversion value) may be paid in cash or in stock, at
our option. Holders may convert their 2013 Convertible Notes into common stock on the net settlement basis described above at any time
from May 1, 2013, until the close of business on July 29, 2013, or if, and only if, one of the following conditions has been met:
During any calendar quarter, and only during such calendar quarter, in which the closing price of our common stock for at least 20
trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter exceeds 130%
of the conversion price per share of common stock in effect on the last day of such preceding calendar quarter
During the five consecutive business days immediately after any 10 consecutive trading day period in which the average trading
price per $1,000 principal amount of 2013 Convertible Notes was less than 98% of the product of the closing price of the
common stock on such date and the conversion rate on such date
We make specified distributions to holders of our common stock or specified corporate transactions occur
The 2013 Convertible Notes were not convertible at the holders' option at any time during 2010 or 2009.
Holders who convert their 2013 Convertible Notes in connection with a change in control may be entitled to a makewhole premium in
the form of an increase in the conversion rate. In addition, upon a change in control, liquidation, dissolution or delisting, the holders of the
2013 Convertible Notes may require us to repurchase for cash all or any portion of their 2013 Convertible Notes for 100% of the principal
amount of the notes plus accrued and unpaid interest, if any. As of December 31, 2010, none of the conditions allowing holders of the
2013 Convertible Notes to convert or requiring us to repurchase the 2013 Convertible Notes had been met.
Concurrent with the issuance of the 2013 Convertible Notes, we entered into note hedge transactions with Citigroup and Bank of America
whereby we have the option to purchase up to 15.5 million shares of our common stock at a price of $24.25 per share (the Convertible
Note Hedges), and we sold warrants to the same financial institutions whereby they have the option to purchase up to 15.5 million shares
of our common stock at a per share price of $36.60 (the Warrants). The Convertible Note Hedges and Warrants were structured to
reduce the potential future share dilution associated with the conversion of the 2013 Convertible Notes. The Convertible Note Hedges and
Warrants are separate contracts with the two financial institutions, are not part of the terms of the 2013 Convertible Notes, and do not
affect the rights of holders under the 2013 Convertible Notes. A holder of the 2013 Convertible Notes does not have any rights with
respect to the Convertible Note Hedges or Warrants.
The net proceeds retained by RadioShack as a result of the issuance of the 2013 Convertible Notes, the purchase of the Convertible Note
Hedges, and the proceeds received from the issuance of the Warrants were approximately $319.2 million. We completed these
transactions to secure a source of liquidity prior to the June 2009 expiration of our $300 million credit facility. On September 11, 2008, we
terminated this credit facility.
For a more detailed description of the 2013 Convertible Notes, Convertible Note Hedges and Warrants, please see Note 5
Indebtedness and Borrowing Facilitiesand Note 6 StockholdersEquityin the Notes to Consolidated Financial Statements.
LongTerm Notes: On May 11, 2001, we issued $350 million of 10year 7.375% notes due May 15, 2011, (the 011 Notes) in a
private offering to qualified institutional buyers under SEC Rule 144A. In August 2001, under the terms of an exchange offering filed with
the SEC, we exchanged substantially all of these notes for a similar amount of publicly registered notes. The exchange resulted in
substantially all of the notes becoming registered with the SEC and did not result in additional debt being issued. The annual interest rate
on the notes is 7.375% per annum with interest payable on November 15 and May 15 of each year. The notes contain certain
nonfinancial covenants.
In June and August 2003, we entered into interest rate swap agreements with underlying notional amounts of debt of $100 million and $50
million, respectively, and both with maturities in May 2011. Our counterparty for these swaps is Citigroup. These swaps effectively
convert a portion of our longterm fixed rate debt to a variable rate. For more information regarding our interest rate swaps, refer to Note
11 Derivative Financial Instrumentsin the Notes to Consolidated Financial Statements.
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In September 2009, we completed a tender offer to purchase for cash any and all of these notes. Upon expiration of the offer, $43.2
million of the aggregate outstanding principal amount of the notes was validly tendered and accepted. We paid a total of $46.6 million,
which consisted of the purchase price of $45.4 million for the tendered notes plus $1.2 million in accrued and unpaid interest, to the
holders of the tendered notes.
On January 4, 2011, we announced our intention to redeem any and all outstanding 2011 Notes on March 4, 2011. See Note 15
Subsequent Eventsin the Notes to Consolidated Financial Statements for more information.
Operating Leases: We use operating leases, primarily for our retail locations and our corporate campus, to lower our capital requirements.
Continuing Lease Obligations: We have obligations under retail leases for locations that we assigned to other businesses. The majority of
these lease obligations arose from leases for which CompUSA Inc. (CompUSA) assumed responsibility as part of its purchase of our
Computer City, Inc. subsidiary in August 1998. Because the company that assumed responsibility for these leases has ceased operations,
we may be responsible for rent due under the leases.
Following an announcement by CompUSA in February 2007 of its intention to close as many as 126 stores and an announcement in
December 2007 that it had been acquired by Gordon Brothers Group, CompUSAs stores ceased operations in January 2008. We may be
responsible for rent due on a portion of the leases that relate to the closed stores. As of February 3, 2011, we had been named as a
defendant in a total of 13 lawsuits from lessors seeking payment from us, 12 of which have been resolved.
Based on all available information pertaining to the status of these lawsuits, and after applying the Financial Accounting Standards
Boards (FASB) guidance on accounting for contingencies, the balance of our accrual for these obligations was $2.4 million and $6.2
million at December 31, 2010 and 2009, respectively. We will continue to monitor this situation for new information on outstanding
litigation and settlements, but we do not consider the amounts of these obligations, both individually and in the aggregate, to be material to
our results of operations or financial position.
Capitalization
The following table sets forth information about our capitalization on the dates indicated.
December 31,
2010 2009
(Dollars in millions) Dollars
% of Total
Capitalization Dollars
% of Total
Capitalization
Shortterm debt $308.0 20.8 % $ %
Longterm debt 331.8 22.4 627.8 37.5
Total debt 639.8 43.2 627.8 37.5
Stockholdersequity 842.5 56.8 1,048.3 62.5
Total capitalization $1,482.3 100.0 % $1,676.1 100.0 %
Our debttototal capitalization ratio increased in 2010 from 2009, primarily due to the repurchase of $398.8 million of our common
stock in 2010.
Dividends: We have paid common stock cash dividends for 24 consecutive years. On November 4, 2010, our Board of Directors declared
an annual dividend of $0.25 per share. The dividend was paid on December 16, 2010, to stockholders of record on November 26, 2010.
The dividend payment of $26.5 million was funded from cash on hand.
Share Repurchases: In July 2008, our Board of Directors approved a share repurchase program with no expiration date authorizing
management to repurchase up to $200 million of our common stock. During the third quarter of 2008, we repurchased 6.0 million shares
or $110.0 million of our common stock under this program. As of December 31, 2008, $90.0 million was available for share repurchases
under this program.
In August 2009, our Board of Directors approved a $200 million increase in this share repurchase program. As of December 31, 2009,
$290 million of the total authorized amount was available for share repurchases under this program.
In August 2010, our Board of Directors approved an increase in this share repurchase program from $400 million to $610 million, with
$500 million available for share repurchases under this program. In November 2010, we completed a $300 million accelerated share
repurchase (ASR) program that we entered into in August 2010, which is further discussed below. We repurchased 14.9 million shares
under the ASR program. In addition, after the conclusion of the ASR program, we repurchased $98.6 million worth of shares in the open
market, representing 4.9 million shares. As of December 31, 2010, $101.4 million of the total authorized amount was available for share
repurchases under this program.
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Accelerated Share Repurchase Program: As mentioned above, in August 2010, we entered into an accelerated share repurchase program
with two investment banks to repurchase shares of our common stock under our approved share repurchase program. On August 24, 2010,
we paid $300 million to the investment banks in exchange for an initial delivery of 11.7 million shares to us. At the conclusion of the ASR
program, we received an additional 3.2 million shares. The 14.9 million shares delivered to us were based on the average daily volume
weighted average price of our common stock over a period beginning immediately after the effective date of the ASR agreements and
ending on November 2, 2010.
Treasury Stock Retirement: In December 2010, our Board of Directors approved the retirement of 45.0 million shares of our common
stock held as treasury stock. These shares returned to the status of authorized and unissued.
OFFBALANCE SHEET ARRANGEMENTS
Other than the operating leases described above, we do not have any offbalance sheet financing arrangements, transactions, or special
purpose entities.
INFLATION
With the exception of increased energy costs in the first half of 2008, inflation has not significantly affected us over the past three years.
We do not expect inflation to have a significant effect on our operations in the foreseeable future.
OTHER MATTERS
Separate from our wireless service provider settlement agreement in July 2010, we notified TMobile that they had breached their
agreement with us. Under the agreement, TMobile has until March 21, 2011, to cure the breaches. In the event that TMobile is unable
to cure the breaches, we have the right to terminate the agreement. The outcome of this action is uncertain and the ultimate resolution of
this matter could have a material adverse effect on our results of operations, financial condition and business operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in the United
States. The application of GAAP requires us to make estimates and assumptions that affect the reported values of assets and liabilities at
the date of the financial statements, the reported amount of revenues and expenses during the reporting period, and the related disclosures
of contingent assets and liabilities. The use of estimates is pervasive throughout our financial statements and is affected by managements
judgment and uncertainties. Our estimates, assumptions and judgments are based on historical experience, current market trends and other
factors that we believe to be relevant and reasonable at the time the consolidated financial statements are prepared. We continually
evaluate the information used to make these estimates as our business and the economic environment change. Actual results may differ
materially from these estimates under different assumptions or conditions.
In the Notes to Consolidated Financial Statements, we describe the significant accounting policies used in the preparation of our
consolidated financial statements. The accounting policies and estimates we consider most critical are revenue recognition; inventory
valuation; estimation of reserves and valuation allowances specifically related to insurance, tax and legal contingencies; valuation of
longlived assets and intangibles, including goodwill; and stockbased compensation.
We consider an accounting policy or estimate to be critical if it requires difficult, subjective or complex judgments, and is material to the
portrayal of our financial condition, changes in financial condition or results of operations. The selection, application and disclosure of our
critical accounting policies and estimates have been reviewed by the Audit and Compliance Committee of our Board of Directors.
Revenue Recognition
Description
Our revenue is derived principally from the sale of name brand and private brand products and services to consumers. Revenue is
recognized, net of an estimate for customer refunds and product returns, when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured.
Certain products, such as wireless telephone handsets, require the customer to use the services of a thirdparty service provider. The
thirdparty service provider pays us an upfront commission for obtaining a new customer and, in some cases, a monthly recurring residual
amount based upon the ongoing arrangement between the service provider and the customer. Our sale of an activated wireless telephone
handset is the single event required to meet the delivery criterion for both the upfront commission and the recurring residual revenue.
Upfront commission revenue, net of estimated wireless service deactivations, is generally recognized at the time an activated wireless
telephone handset is sold to the customer at the pointofsale. Recurring residual revenue is recognized as earned under the terms of each
contract with the service provider, which is typically as the service provider bills its customer, generally on a monthly basis.
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Judgments and uncertainties involved in the estimate
Our revenue recognition accounting methodology requires us to make certain judgments regarding the estimate of future sales returns and
wireless service deactivations. Our estimates for product refunds and returns, wireless service deactivations and commission revenue
adjustments are based on historical information pertaining to these items. Based on our extensive history in selling activated wireless
telephone handsets, we have been able to establish reliable estimates for wireless service deactivations. However, our estimates for
wireless service deactivations can be affected by certain characteristics of and decisions made by our service providers. These factors
include changes in the quality of their customer service, the quality and performance of their networks, their rate plan offerings, their
policies regarding extensions of customer credit, and their wireless telephone handset product offerings. These factors add uncertainty to
our estimates.
Effect if actual results differ from assumptions
We have not made any material changes in the methodology used to estimate sales returns or wireless service deactivations during the past
three fiscal years. We continue to update our estimate for wireless service deactivations to reflect the most recently available information
regarding the characteristics of and decisions made by our service providers discussed above. If actual results differ from our estimates
due to these or various other factors, the amount of revenue recorded could be materially affected. A 10% difference in our reserves for
the estimates noted above would have affected net sales and operating revenues by approximately $3.3 million in 2010.
Inventory Valuation
Description
Our inventory consists primarily of finished goods available for sale at our retail locations or within our distribution centers and is
recorded at the lower of average cost (which approximates FIFO) or market. The cost components recorded within inventory are the
vendor invoice cost and certain allocated freight, distribution, warehousing and other costs relating to merchandise acquisition required to
bring the merchandise from the vendor to the location where it is offered for sale.
Typically, the market value of our inventory is higher than its aggregate cost. Determination of the market value may be very complex
and, therefore, requires a high degree of judgment. In order for management to make the appropriate determination of market value, the
following items are commonly considered: inventory turnover statistics, current selling prices, seasonality factors, consumer trends,
competitive pricing, performance of similar products or accessories, planned promotional incentives, technological obsolescence, and
estimated costs to sell or dispose of merchandise such as sales commissions.
If the estimated market value, calculated as the amount we expect to realize, net of estimated selling costs, from the ultimate sale or
disposal of the inventory, is determined to be less than the recorded cost, we record a provision to reduce the carrying amount of the
inventory item to its net realizable value.
We have not made any material changes in the methodology used to establish our inventory valuation or the related reserves during the
past three fiscal years, and we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or
assumptions we use to estimate our inventory valuation reserves. Differences between management estimates and actual performance and
pricing of our merchandise could result in inventory valuations that differ from the amount recorded at the financial statement date and
could also cause fluctuations in the amount of recorded cost of products sold. If our estimates regarding market value are inaccurate or
changes in consumer demand affect certain products in an unforeseen manner, we may be exposed to material losses or gains in excess of
our established valuation reserve. We believe that we have sufficient current and historical knowledge to record reasonable estimates for
our inventory valuation reserves. However, it is possible that actual results could differ from recorded reserves.
Estimation of Reserves and Valuation Allowances for SelfInsurance, Income Taxes, and Litigation Contingencies
Description
The amount of liability we record for claims related to insurance, tax and legal contingencies requires us to make judgments about the
amount of expenses that will ultimately be incurred. We are insured for certain losses related to workers' compensation, property and other
liability claims, with deductibles up to $1.0 million per occurrence. This insurance coverage limits our exposure for any catastrophic
claims that result in liability in excess of the deductible. We also have a selfinsured health program administered by a thirdparty
covering the majority of our employees that participate in our health insurance programs. We estimate the amount of our reserves for all
insurance programs discussed above at the end of each reporting period. This estimate is based on historical claims experience,
demographic factors, severity factors, and other factors we deem relevant.
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We are subject to periodic audits from multiple domestic and foreign tax authorities related to income tax, sales and use tax, personal
property tax, and other forms of taxation. These audits examine our tax positions, timing of income and deductions, and allocation
procedures across multiple jurisdictions. Our accounting for tax estimates and contingencies requires us to evaluate tax issues and
establish reserves in our consolidated financial statements based on our estimate of current probable tax exposures. Depending on the
nature of the tax issue, we could be subject to audit over several years; therefore, our estimated reserve balances might exist for multiple
years before an issue is resolved by the taxing authority.
We are involved in legal proceedings and governmental inquiries associated with employment and other matters. Our accounting for legal
contingencies requires us to estimate the probable losses in these matters. This estimate has been developed in consultation with inhouse
and outside legal counsel and is based upon a combination of litigation and settlement strategies.
Our liabilities for insurance, tax and legal contingencies contain uncertainties because we are required to make assumptions and to apply
judgment to estimate the exposures associated with these items. We use our history and experience, as well as other specific circumstances
surrounding these claims, in evaluating the amount of liability we should record. As additional information becomes available, we assess
the potential liability related to our various claims and revise our estimates as appropriate. These revisions could materially affect our
results of operations and financial position or liquidity.
We have not made any material changes in the methodology used to estimate our insurance reserves during the past three fiscal years, and
we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions for these
items. However, a 10% change in our insurance reserves at December 31, 2010, would have affected net income by approximately $4.3
million. As of December 31, 2010, actual losses had not exceeded our expectations. Additionally, for claims that exceed our deductible
amount, we record a gross liability and corresponding receivable representing expected recoveries, since we are not legally relieved of our
obligation to the claimant.
Although we believe that our insurance, tax and legal reserves are based on reasonable judgments and estimates, actual results could
differ, which may expose us to material gains or losses in future periods. These actual results could materially affect our effective tax rate,
earnings, deferred tax balances and cash flows in the period of resolution.
Valuation of LongLived Assets and Intangibles, including Goodwill
Description
Longlived assets, such as property and equipment, are reviewed for impairment when events or changes in circumstances indicate that
the carrying amount may not be recoverable, such as insufficient cash flows or plans to dispose of or sell longlived assets before the end
of their previously estimated useful lives. The carrying amount is considered not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount is not recoverable, we recognize an
impairment loss equal to the amount by which the carrying amount exceeds fair value. We estimate fair value based on projected future
discounted cash flows. Impairment losses, if any, are recorded in the period in which the impairment occurs. The carrying value of the
asset is adjusted to the new carrying value, and any subsequent increases in fair value are not recorded. Additionally, if it is determined
that the estimated remaining useful life of the asset should be decreased, the periodic depreciation expense is adjusted based on the new
existing carrying value of the asset and the new remaining useful life. Our policy is to evaluate longlived assets for impairment at a store
level for retail operations.
We have acquired goodwill and other separately identifiable intangible assets related to business acquisitions. The original valuation of
these intangible assets is based on estimates of future profitability, cash flows and other judgmental factors. Goodwill represents the
excess of the purchase price over the fair value of net assets acquired. We review our goodwill and other intangible asset balances on an
annual basis, during the fourth quarter, and whenever events or changes in circumstances indicate the carrying value of a reporting unit or
an intangible asset might exceed their fair value. If the carrying amount of an intangible asset or a reporting unit exceeds its fair value, we
recognize an impairment loss for this difference.
Our impairment loss calculations for longlived assets contain uncertainties because they require us to apply judgment and estimates
concerning future cash flows, strategic plans, useful lives and assumptions about market performance. We also apply judgment in the
selection of a discount rate that reflects the risk inherent in our current business model.
Our impairment loss calculations for intangible assets and goodwill contain uncertainties because they require us to estimate fair values
related to these assets. We estimate
34
fair values based on various valuation techniques such as discounted cash flows and other comparable market analyses. These types of
analyses contain uncertainties because they require us to make judgments and assumptions regarding future profitability, industry factors,
planned strategic initiatives, discount rates and other factors.
We have not made any material changes in the accounting methodologies we use to assess impairment loss for longlived assets,
intangible assets, or goodwill during the past three fiscal years, and we do not believe there is a reasonable likelihood that there will be a
material change in the estimates or assumptions we use in calculating these impairment losses. However, if actual results or performance
of certain business units are not consistent with our estimates and assumptions, we may be exposed to additional impairment charges,
which could be material to our results of operations.
The total value of our goodwill and intangible assets at December 31, 2010, was $41.9 million. Of this amount, $37.8 million related to
goodwill from the purchase of RadioShack de Mexico. Based on our most recent review of goodwill impairment, we noted that the fair
values of our reporting units were substantially greater than their carrying values.
StockBased Compensation
Description
We have historically granted certain stockbased awards to employees and directors in the form of nonqualified stock options, incentive
stock options, restricted stock and deferred stock units. See Note 2 Summary of Significant Accounting Policiesand Note 7
StockBased Incentive Plansin the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form
10K for a more complete discussion of our stockbased compensation programs.
At the date an award is granted, we determine the fair value of the award and recognize the compensation expense over the requisite
service period, which typically is the period over which the award vests. The restricted stock and deferred stock units are valued at the fair
market value of our stock on the date of grant. The fair value of stock options with only service conditions is estimated using the
BlackScholesMerton optionpricing model. The fair value of stock options with service and market conditions is valued utilizing a
lattice model with Monte Carlo simulations.
The BlackScholesMerton and lattice models require management to apply judgment and use highly subjective assumptions, including
expected option life, volatility of stock prices, and employee forfeiture rate. We use historical data and judgment to estimate the expected
option life and employee forfeiture rate, and use historical and implied volatility when estimating the stock price volatility. Changes in
these assumptions can materially affect the fair value estimate.
We have not made any material changes in the accounting methodologies used to record stockbased compensation during the past three
years. While the assumptions that we develop are based on our best expectations, they involve inherent uncertainties based on market
conditions and employee behavior that are outside of our control. If actual results are not consistent with the assumptions used, the
stockbased compensation expense reported in our financial statements may not be representative of the actual economic cost of the
stockbased compensation. Additionally, if actual employee forfeitures significantly differ from our estimated forfeitures, we may have an
adjustment to our financial statements in future periods. A 10% change in our stockbased compensation expense in 2010 would have
affected our net income by approximately $1.0 million.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Matters discussed in our MD&A and in other parts of this Annual Report on Form 10K include forwardlooking statements within the
meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange
Act. These forwardlooking statements are statements that are not historical and may be identified by the use of words such as expect,
believe,anticipate,estimate,intend,potentialor similar words. These matters include statements concerning
managements plans and objectives relating to our operations or economic performance and related assumptions. We specifically disclaim
any duty to update any of the information set forth in this report, including any forwardlooking statements. Forwardlooking statements
are made based on managements current expectations and beliefs concerning future events and, therefore, involve a number of
assumptions, risks and uncertainties, including the risk factors described in Item 1A, Risk Factors,of this Annual Report on Form
10K. Management cautions that forwardlooking statements are not guarantees, and our actual results could differ materially from those
expressed or implied in the forwardlooking statements.
35
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
At December 31, 2010, the only derivative instruments that materially increased our exposure to market risks for interest rates, foreign
currency rates, commodity prices or other market price risks were interest rate swaps, which serve as an economic hedge on our longterm
debt. We do not use derivatives for speculative purposes. Refer to Note 11 Derivative Financial Instrumentsin Notes to
Consolidated Financial Statements of this Annual Report on Form 10K for additional information.
Our exposure to interest rate risk results from changes in shortterm interest rates. Interest rate risk exists with respect to our net
investment position at December 31, 2010, of $312.1 million, consisting of fluctuating shortterm investments of $462.1 million and
offset by $150 million of indebtedness which, because of our interest rate swaps, effectively bears interest at shortterm floating rates. A
hypothetical change of 100 basis points in the interest rate applicable to this floatingrate net exposure would result in a change in annual
net interest expense of $3.1 million and an approximate $0.4 million change to the fair value of our interest rate swaps, which would also
affect net interest expense. This hypothesis assumes no change in the principal or investment balance.
We have market risk arising from changes in foreign currency exchange rates related to our purchase of inventory from manufacturers
located in China and other areas outside of the U.S. Our purchases are denominated in U.S. dollars; however, the strengthening of the
Chinese currency, or other currencies, against the U.S. dollar could cause our vendors to increase the prices of items we purchase from
them. It is not possible to estimate the effect of foreign currency exchange rate changes on our purchases of this inventory. We are also
exposed to foreign currency fluctuations related to our Mexican subsidiary, which accounted for less than 5% of consolidated net sales and
operating revenues in 2010.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Index to our Consolidated Financial Statements is found on page 40. Our Consolidated Financial Statements and Notes to
Consolidated Financial Statements follow the index.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We have established a system of disclosure controls and other procedures that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the
time periods specified by the SECs rules and forms, and that such information is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a15(e)
under the Exchange Act) was performed as of the end of the period covered by this annual report. This evaluation was performed under
the supervision and with the participation of management, including our CEO and CFO.
Based upon that evaluation, our CEO and CFO have concluded that these disclosure controls and procedures were effective.
Managements Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rule 13a15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control
Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation
under the framework in Internal Control Integrated Framework,our management concluded that our internal control over financial
reporting was effective as of December 31, 2010. The effectiveness of our internal control over financial reporting as of December 31,
2010, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which
is included herein.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
36
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
We will file a definitive proxy statement with the SEC on or about April 20, 2011. The information called for by this Item with respect to
directors and the Audit and Compliance Committee of the Board of Directors is incorporated by reference from the Proxy Statement for
the 2011 Annual Meeting under the headings Item 1 Election of Directorsand Meetings and Committees of the Board.For
information relating to our Executive Officers, see Part I of this Annual Report on Form 10K. The Section 16(a) reporting information is
incorporated by reference from the Proxy Statement for the 2011 Annual Meeting under the heading Section 16(a) Beneficial Ownership
Reporting Compliance.Information regarding our Financial Code of Ethics is incorporated by reference from the Proxy Statement for
the 2011 Annual Meeting under the heading Corporate Governance Code of Conduct and Financial Code of Ethics.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item with respect to executive compensation is incorporated by reference from the Proxy Statement for
the 2011 Annual Meeting under the headings Compensation Discussion and Analysis,Executive Compensation,NonEmployee
Director Compensation,and Compensation Committee Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
The information called for by this Item with respect to security ownership of certain beneficial owners and management is incorporated by
reference from the Proxy Statement for the 2011 Annual Meeting under the heading Ownership of Securities.
EQUITY COMPENSATION PLANS
The following table provides a summary of information as of December 31, 2010, relating to our equity compensation plans in which our
common stock is authorized for issuance.
Equity Compensation Plan Information
(Share amounts in thousands)
(a)
Number of shares to
be
issued upon exercise
of
outstanding options,
warrants and rights
(b)
Weightedaverage
exercise price of
outstanding options,
warrants and rights
(c)
Number of shares
remaining available
for
future issuance under
equity compensation
plans
(excluding shares
reflected
in column (a))
Equity compensation plans approved by
shareholders (1) 4,593 (2) $14.22 10,500 (3)
Equity compensation plans not approved by
shareholders (4) 4,589 $20.35
Total 9,182 $17.52 10,500
(1) Includes the 1997 Incentive Stock Plan (ISP), the 2001 ISP, the 2004 Deferred Stock Unit Plan for
NonEmployee Directors, the 2007 Restricted Stock Plan (RSP), and the 2009 ISP. Refer to Note 7
StockBased Incentive Plansof our Notes to Consolidated Financial Statements included elsewhere in this
Annual Report on Form 10K for further information. The 1997 ISP expired on February 27, 2007, and no
further grants may be made under this plan. The 2001 ISP and the 2007 RSP terminated upon shareholder
approval of the 2009 ISP on May 21, 2009. No further grants may be made under the 2001 ISP or the 2007
RSP.
(2) This amount includes approximately 454,000 shares of restricted stock and approximately 211,000 deferred
stock units.
(3) This amount includes approximately 705,000 deferred stock units.
(4) Includes the 1999 ISP and options granted as an inducement grant in connection with our Chief Executive
Officers employment with RadioShack in the third quarter of 2006. Refer to Note 7 StockBased
Incentive Plansin the Notes to Consolidated Financial Statements included elsewhere in this Annual Report
on Form 10K for more information concerning the 1999 ISP and the third quarter 2006 inducement grant.
The 1999 ISP expired on February 23, 2009, and no further grants may be made under this plan.
37
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information called for by this Item with respect to certain relationships and transactions with management and others is incorporated
by reference from the Proxy Statement for the 2011 Annual Meeting under the heading Corporate Governance Director Independence
and Review and Approval of Transactions with Related Persons.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information called for by this Item with respect to principal accounting fees and services is incorporated by reference from the Proxy
Statement for the 2011 Annual Meeting under the headings Item 2 Ratification of the Appointment of PricewaterhouseCoopers LLP as
Independent Registered Public Accounting Firm Fees and Services of the Independent Registered Public Accounting Firm and Policy
for PreApproval of Audit and Permissible NonAudit Services of Independent Registered Public Accounting Firm.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Documents filed as part of this Annual Report on
Form 10K.
1) The financial statements listed in the "Index to Consolidated Financial Statements" on page 40.
2) None
3) A list of the exhibits required by Item 601 of Regulation SK to be filed as part of this report is set forth in the Index to Exhibits
beginning on page 70, which immediately precedes such exhibits.
Certain instruments defining the rights of holders of our longterm debt are not filed as exhibits to this report because the total amount of
securities authorized thereunder does not exceed ten percent of our total assets on a consolidated basis. We will furnish the SEC copies of
such instruments upon request.
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, RadioShack Corporation has
duly caused this Annual Report on Form 10K to be signed on its behalf by the undersigned, thereunto duly authorized.
February 22, 2011 By: /s/ Julian C. Day
Julian C. Day
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10K has been signed
below by the following persons on behalf of RadioShack Corporation and in the capacities indicated on this 22nd day of February, 2011.
Signature Title
/s/ Julian C. Day Chairman of the Board and Chief Executive Officer
Julian C. Day (Principal Executive Officer)
/s/ James F. Gooch President and Chief Financial Officer
James F. Gooch (Principal Financial Officer)
/s/ Martin O. Moad Vice President and Controller
Martin O. Moad (Principal Accounting Officer)
/s/ Frank J. Belatti Director /s/ Jack L. Messman Director
Frank J. Belatti Jack L. Messman
/s/ Daniel R. Feehan Director /s/ Thomas G. Plaskett Director
Daniel R. Feehan Thomas G. Plaskett
/s/ H. Eugene Lockhart Director /s/ Edwina D. Woodbury Director
H. Eugene Lockhart Edwina D. Woodbury
39
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm 41
Consolidated Statements of Income for each of the three years in the
period ended December 31, 2010 42
Consolidated Balance Sheets at December 31, 2010 and 2009 43
Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 2010 44
Consolidated Statements of Stockholders' Equity and Comprehensive
Income for each of the three years in the period ended December 31, 2010 45
Notes to Consolidated Financial Statements 46 69
All financial statement schedules have been omitted because they are not applicable, not required, or the information is included in the
consolidated financial statements or notes thereto.
40
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of RadioShack Corporation:
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial
position of RadioShack Corporation and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in
the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2010, based on criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these
financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial
reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such
other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Fort Worth, Texas
February 22, 2011
41
Consolidated Statements of Income
2010 2009 2008
% of % of % of
(In millions, except per share
amounts) Dollars Revenues Dollars Revenues Dollars Revenues
Net sales and operating revenues $4,472.7 100.0 % $4,276.0 100.0 % $4,224.5 100.0 %
Cost of products sold (includes
depreciation amounts of
$7.7 million, $9.2 million and
$11.2 million, respectively) 2,462.1 55.0 2,313.5 54.1 2,301.8 54.5
Gross profit 2,010.6 45.0 1,962.5 45.9 1,922.7 45.5
Operating expenses:
Selling, general and administrative 1,554.7 34.8 1,507.9 35.3 1,509.8 35.7
Depreciation and amortization 76.5 1.7 83.7 2.0 87.9 2.1
Impairment of longlived assets 4.0 0.1 1.5 2.8 0.1
Total operating expenses 1,635.2 36.6 1,593.1 37.3 1,600.5 37.9
Operating income 375.4 8.4 369.4 8.6 322.2 7.6
Interest income 2.6 4.8 0.1 14.6 0.3
Interest expense (41.9 ) (0.9 ) (44.1 ) (1.0 ) (34.9 ) (0.8 )
Other loss (1.6 ) (2.4 )
Income before income taxes 336.1 7.5 328.5 7.7 299.5 7.1
Income tax expense 130.0 2.9 123.5 2.9 110.1 2.6
Net income $206.1 4.6 % $205.0 4.8 % $189.4 4.5 %
Basic $1.71 $1.63 $1.47
Diluted: $1.68 $1.63 $1.47
Shares used in computing net income
per share:
Basic 120.5 125.4 129.0
Diluted 122.7 126.1 129.1
The accompanying notes are an integral part of these consolidated financial statements.
42
Consolidated Balance Sheets
December 31,
(In millions, except for share amounts) 2010 2009
Assets
Current assets:
Cash and cash equivalents $569.4 $908.2
Accounts and notes receivable, net 377.5 322.5
Inventories 723.7 670.6
Other current assets 108.1 114.4
Total current assets 1,778.7 2,015.7
Property, plant and equipment, net 274.3 282.3
Goodwill, net 41.2 38.9
Other assets, net 81.2 92.4
Total assets $2,175.4 $2,429.3
Liabilities and StockholdersEquity
Current liabilities:
Current maturities of longterm debt $308.0 $
Accounts payable 272.4 262.9
Accrued expenses and other current liabilities 318.0 360.7
Income taxes payable 9.7 30.9
Total current liabilities 908.1 654.5
Longterm debt, excluding current maturities 331.8 627.8
Other noncurrent liabilities 93.0 98.7
Total liabilities 1,332.9 1,381.0
Commitments and contingencies
Stockholdersequity:
Preferred stock, no par value, 1,000,000 shares authorized:
Series A junior participating, 300,000 shares designated and none issued
Common stock, $1 par value, 650,000,000 shares authorized;
146,033,000 and 191,033,000 shares issued, respectively 146.0 191.0
Additional paidin capital 147.3 161.8
Retained earnings 1,502.5 2,323.9
Treasury stock, at cost; 40,260,000 and 65,806,000 shares, respectively (949.0 ) (1,621.9 )
Accumulated other comprehensive loss (4.3 ) (6.5 )
Total stockholdersequity 842.5 1,048.3
Total liabilities and stockholdersequity $2,175.4 $2,429.3
43
Consolidated Statements of Cash Flows
(In millions) 2010 2009 2008
Cash flows from operating activities:
Net income $206.1 $205.0 $189.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 84.2 92.9 99.1
Amortization of discount on convertible notes 15.0 13.8 5.0
Impairment of longlived assets 4.0 1.5 2.8
Stockbased compensation 9.9 12.1 12.8
Deferred income taxes 12.0 7.6 11.7
Other noncash items 12.7 0.8 18.7
Changes in operating assets and liabilities:
Accounts and notes receivable (39.9 ) (79.6 ) 15.2
Inventories (60.4 ) (34.7 ) 93.6
Other current assets (3.6 ) (2.8 ) (8.7 )
Accounts payable, accrued expenses, income taxes payable and other (85.0 ) 29.2 (165.0 )
Net cash provided by operating activities 155.0 245.8 274.6
Cash flows from investing activities:
Additions to property, plant and equipment (80.1 ) (81.0 ) (85.6 )
Acquisition of Mexican subsidiary, net of cash acquired (0.2 ) (42.0 )
Other investing activities 0.1 0.4 3.3
Net cash used in investing activities (80.0 ) (80.8 ) (124.3 )
Cash flows from financing activities:
Purchases of treasury stock (398.8 ) (111.3 )
Payments of dividends (26.5 ) (31.3 ) (31.3 )
Changes in cash overdrafts 7.5 2.2 (16.8 )
Proceeds from exercise of stock options 4.0 0.7
Repayments of borrowings (43.2 ) (5.0 )
Issuance of convertible notes 375.0
Convertible notes issuance costs (9.4 )
Purchase of convertible notes hedges (86.3 )
Sale of common stock warrants 39.9
Net cash (used in) provided by financing activities (413.8 ) (71.6 ) 154.8
Net (decrease) increase in cash and cash equivalents (338.8 ) 93.4 305.1
Cash and cash equivalents, beginning of period 908.2 814.8 509.7
Cash and cash equivalents, end of period $569.4 $908.2 $814.8
Supplemental cash flow information:
Interest paid $26.6 $30.3 $26.5
Income taxes paid 136.7 122.4 123.2
44
Consolidated Statements of StockholdersEquity and Comprehensive Income
Shares at December 31, Dollars at December 31,
(In millions) 2010 2009 2008 2010 2009 2008
Common stock
Beginning of year 191.0 191.0 191.0 $191.0 $191.0 $191.0
Retirement of treasury stock (45.0 ) (45.0 )
Beginning and end of year 146.0 191.0 191.0 $146.0 $191.0 $191.0
Treasury stock
Beginning of year (65.8 ) (65.9 ) (59.9 ) $(1,621.9 ) $(1,625.9 ) $(1,516.5 )
Purchase of treasury stock (19.8 ) (6.1 ) (398.8 ) (111.3 )
Issuance of common stock 0.1 0.1 0.1 2.7 3.1 1.9
Retirement of treasury stock 45.0 1,063.9
Exercise of stock options 0.2 5.1 0.9
End of year (40.3 ) (65.8 ) (65.9 ) $(949.0 ) $(1,621.9 ) $(1,625.9 )
Additional paidin capital
Beginning of year $161.8 $152.5 $108.4
Issuance of common stock (4.4 ) (1.7 ) (1.3 )
Exercise of stock options (1.9 ) (0.2 )
Stockbased compensation 9.6 11.2 11.7
Retirement of treasury stock (17.8 )
Conversion option of convertible notes 76.9
Purchase of convertible notes hedges (86.3 )
Tax benefit from purchase of convertible notes
hedges 3.2
Sale of common stock warrants 39.9
End of year $147.3 $161.8 $152.5
Retained earnings
Beginning of year $2,323.9 $2,150.2 $1,992.1
Net income 206.1 205.0 189.4
Retirement of treasury stock (1,001.0 )
Cash dividends declared (26.5 ) (31.3 ) (31.3 )
End of year $1,502.5 $2,323.9 $2,150.2
Accumulated other comprehensive loss
Beginning of year $(6.5 ) $(7.0 ) $(5.3 )
Other comprehensive income (loss) 2.2 0.5 (1.7 )
End of year $(4.3 ) $(6.5 ) $(7.0 )
Total stockholders' equity $842.5 $1,048.3 $860.8
Comprehensive income
Net income $206.1 $205.0 $189.4
Other comprehensive income (loss), all net of
tax:
Foreign currency translation adjustments 2.4 1.1 (2.5 )
Pension adjustments (0.2 ) (0.5 ) 0.8
Amortization of gain on cash flow hedge (0.1 )
Other comprehensive income (loss) 2.2 0.5 (1.7 )
Comprehensive income $208.3 $205.5 $187.7
45
Notes to Consolidated Financial Statements
The Notes to our Consolidated Financial Statements are important and should be read in conjunction with your review of the Consolidated
Financial Statements. Below is a list of the notes.
Note 1 Description of Business
Note 2 Summary of Significant Accounting Policies
Note 3 Supplemental Balance Sheet Disclosures
Note 4 Acquisitions
Note 5 Indebtedness and Borrowing Facilities
Note 6 StockholdersEquity
Note 7 StockBased Incentive Plans
Note 8 Employee Benefit Plans
Note 9 Income Taxes
Note 10 Net Income Per Share
Note 11 Derivative Financial Instruments
Note 12 Fair Value Measurements
Note 13 Commitments and Contingencies
Note 14 Wireless Service Provider Settlement Agreement
Note 15 Subsequent Events
Note 16 Segment Reporting
Note 17 Quarterly Data (Unaudited)
46
NOTE 1 DESCRIPTION OF BUSINESS
RadioShack Corporation was incorporated in Delaware in 1967. Throughout this report, the terms our,we,usand RadioShack
refer to RadioShack Corporation, including its subsidiaries. We primarily engage in the retail sale of consumer electronics goods and
services through our RadioShack store chain.
U.S. RADIOSHACK COMPANYOPERATED STORES
At December 31, 2010, we operated 4,486 U.S. companyoperated stores under the RadioShack brand located throughout the United
States, as well as in Puerto Rico and the U.S. Virgin Islands. These stores are located in strip centers and major shopping malls, as well as
individual storefronts. Each location carries a broad assortment of both name brand and private brand consumer electronics products.
Our product lines are categorized into seven platforms. Our wireless platform includes postpaid and prepaid wireless handsets and
communication devices such as scanners and GPS products. Our accessory platform includes home entertainment, wireless, music,
computer, video game and GPS accessories; media storage; power adapters; digital imaging products and headphones. Our modern home
platform includes home audio and video endproducts, personal computing products, residential telephones, and Voice over Internet
Protocol products. Our personal electronics platform includes digital cameras, digital music players, toys, satellite radios, video gaming
hardware, camcorders, and general radios. Our power platform includes general and special purpose batteries and battery chargers. Our
technical platform includes wire and cable, connectivity products, components and tools, and hobby products. We also provide consumers
access to thirdparty services such as prepaid wireless airtime and extended service plans in our service platform.
KIOSKS
At December 31, 2010, we operated 1,267 kiosks located throughout most of the United States. These kiosks are located inside Target and
Sams Club stores. These locations, which are not RadioShackbranded, offer primarily wireless handsets with activation of thirdparty
wireless services.
In February 2009, we signed a contract extension with Sams Club through March 31, 2011, with a transition period ending June 30,
2011, to continue operating kiosks in certain Sams Club locations. As of December 31, 2010, we operated 417 of these kiosks. This
transition will begin on April 1, 2011, and conclude on June 30, 2011, with the assignment to Sams Club of all kiosks operated by the
Company in Sams Club stores. As part of the terms of the contract, we assigned the operation of 22 and 66 kiosk locations to Sams
Club in 2010 and 2009, respectively.
In April 2009 we agreed with Sprint to cease our arrangement to jointly operate the Sprintbranded kiosks in operation at that date. This
agreement allowed us to operate these kiosks under the Sprint name for a reasonable period of time, allowing us to transition the kiosks to
a new format. In August 2009, we transitioned these kiosks to multiple wireless carrier RadioShackbranded locations. Most of these
locations are now managed and reported as extensions of existing RadioShack companyoperated stores located in the same shopping
malls.
In the fourth quarter of 2009, we commenced a test rollout of kiosk locations in approximately 100 Target stores. In the third quarter of
2010, we signed a multiyear agreement to operate kiosk locations in certain Target stores (Target Mobile). We operated 850 Target
Mobile locations at December 31, 2010. We plan to operate Target Mobile locations in approximately 1,450 Target stores by June 30,
2011.
OTHER
In addition to the reportable segments discussed above, we have other sales channels and support operations described as follows:
Dealer Outlets: At December 31, 2010, we had a network of 1,207 RadioShack dealer outlets, including 34 located outside of North
America. Our North American outlets provide name brand and private brand products and services, typically to smaller communities.
These independent dealers are often engaged in other retail operations and augment their businesses with our products and service
offerings. Our dealer sales derived outside of the United States are not material.
RadioShack.com: Products and information are available through our commercial website www.radioshack.com. Online customers can
purchase, return or exchange various products available through this website. Additionally, certain products ordered online may be picked
up, exchanged or returned at RadioShack stores.
International Operations: As of December 31, 2010, there were 211 companyoperated stores under the RadioShack brand, nine dealers,
and one distribution center in Mexico. Prior to December 2008, these operations were overseen by a joint venture in which we were a
slightly less than 50% minority owner with Grupo Gigante, S.A.B. de C.V. In December 2008, we increased our ownership of this joint
venture to 100%.
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Support Operations:
Our retail stores, along with our kiosks and dealer outlets, are supported by an established infrastructure. Below are the major components
of this support structure.
Distribution Centers At December 31, 2010, we had four U.S. distribution centers shipping to our U.S. retail locations and dealer
outlets. One of these distribution centers also serves as a fulfillment center for our online customers. Additionally, we have a distribution
center that ships fixtures to our U.S. companyoperated stores and kiosks.
RadioShack Technology Services (RSTS) Our management information system architecture is composed of a distributed, online
network of computers that links all stores, customer channels, delivery locations, service centers, credit providers, distribution facilities
and our home office into a fully integrated system. Each store has its own server to support the pointofsale (POS) system. The
majority of our U.S. companyoperated stores and kiosks communicate through a broadband network, which provides efficient access to
customer support data. This design also allows store management to track daily sales and inventory at the product or sales associate level.
RSTS provides the majority of our programming and systems analysis needs.
RadioShack Global Sourcing (RSGS) RSGS serves our wideranging international import/export, sourcing, evaluation, logistics and
quality control needs. RSGSs activities support our name brand and private brand businesses.
Consumer Electronics Manufacturing We operate two manufacturing facilities in the United States and one in China. These three
manufacturing facilities employed approximately 1,800 people as of December 31, 2010. We manufacture a variety of products, primarily
sold through our retail outlets, including telephones, antennas, wire and cable products, and a variety of hardtofindparts and
accessories for consumer electronics products.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The consolidated financial statements include the accounts of RadioShack Corporation and all majorityowned
domestic and foreign subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.
Use of Estimates: The preparation of financial statements in accordance with accounting principles generally accepted in the United States
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, related revenues and expenses, and
the disclosure of gain and loss contingencies at the date of the financial statements and during the periods presented. We base these
estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates
concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ
materially from those estimates.
Cash and Cash Equivalents: Cash on hand in stores, deposits in banks and all highly liquid investments with a maturity of three months or
less at the time of purchase are considered cash and cash equivalents. We carry our cash equivalents at cost, which approximates fair value
because of the short maturity of the instruments. The weighted average annualized interest rates were 0.4% and 0.3% at December 31,
2010 and 2009, respectively, for cash equivalents totaling $462.1 million and $820.5 million, respectively. We maintain zero balance cash
disbursement accounts with certain banks. Outstanding checks in excess of deposits with these banks totaled $49.1 million and $41.6
million at December 31, 2010 and 2009, respectively, and are classified as accounts payable in the Consolidated Balance Sheets. Changes
in these overdraft amounts are reported in the Consolidated Statements of Cash Flows as a financing activity.
Accounts Receivable and Allowance for Doubtful Accounts: Concentrations of credit risk with respect to customer and dealer receivables
are limited due to the large number of customers, dealers and their location in many different geographic areas of the country. We
establish an allowance for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends and other
information. Historically, such losses, in the aggregate, have not exceeded our expectations. Account balances are charged against the
allowance when we believe it is probable that the receivable will not be recovered. We have concentration of credit risk from service
providers in the wireless telephone industry, primarily Sprint, AT&T, TMobile and Verizon. The average payment term for these
receivable balances is approximately 45 days.
Inventories: Our inventories are stated at the lower of cost (principally based on average cost, which approximates FIFO) or market value
and are comprised primarily of finished goods. Included in the cost of the inventories are inbound freight expenses to our distribution
centers, outbound freight expenses to our retail outlets, and other direct costs relating to merchandise acquisition and distribution. Also
included in the cost of inventory are certain vendor allowances that are not a reimbursement of specific, incremental and identifiable costs
to promote a vendors
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products. If the calculated net realizable value of the inventory is determined to be less than the recorded cost, a provision is made to
reduce the carrying amount of the inventory.
Property, Plant and Equipment: We state our property, plant and equipment at cost, less accumulated depreciation and amortization.
Depreciation and amortization are calculated using the straightline method over the following useful lives: 1040 years for buildings;
215 years for furniture, fixtures, equipment and software; leasehold improvements are amortized over the shorter of the terms of the
underlying leases, including certain renewal periods, or the estimated useful lives of the improvements. Major additions and betterments
that substantially extend the useful life of an asset are capitalized and depreciated. Expenditures for normal maintenance and repairs are
charged directly to expense as incurred.
Capitalized Software Costs: We capitalize qualifying costs related to the acquisition or development of internaluse software.
Capitalization of costs begins after the conceptual formulation stage has been completed. Capitalized costs are amortized over the
estimated useful life of the software, which ranges between three and five years. The unamortized balance of capitalized software costs at
December 31, 2010 and 2009, was $55.3 million and $46.6 million, respectively. Amortization of computer software was approximately
$11.9 million, $15.1 million and $21.1 million in 2010, 2009 and 2008, respectively.
Impairment of LongLived Assets: We review longlived assets (primarily property, plant and equipment) held and used, or to be
disposed of, for impairment whenever events or changes in circumstances indicate that the net book value of the asset may not be
recoverable. Recoverability is assessed based on estimated undiscounted cash flows from the useful asset. If the carrying amount of an
asset is not recoverable, we recognize an impairment loss equal to the amount by which the carrying amount exceeds fair value. We
estimate fair value based on projected future discounted cash flows. Our policy is to evaluate longlived assets for impairment at a store
level for retail operations.
Leases: For lease agreements that provide for escalating rent payments or freerent occupancy periods, we recognize rent expense on a
straightline basis over the noncancelable lease term and certain option renewal periods that appear to be reasonably assured at the
inception of the lease term. The lease term commences on the date we take possession of or control the physical use of the property.
Deferred rent is included in other current liabilities in the Consolidated Balance Sheets.
Goodwill and Intangible Assets: Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill
and intangible assets with indefinite useful lives are reviewed at least annually for impairment (and in interim periods if certain events
occur indicating that the carrying value of goodwill and intangible assets may be impaired). We estimate fair values utilizing valuation
methods such as discounted cash flows and comparable market valuations. We have elected the fourth quarter to complete our annual
goodwill impairment test. As a result of the fourth quarter impairment analyses, we determined that no impairment charges to goodwill
were required.
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The changes in the carrying amount of goodwill by segment were as follows for the years ended December 31, 2010 and 2009:
(In millions)
U.S.
RadioShack
Stores Kiosks Other Total
Balances at December 31, 2008
Goodwill $2.8 $18.6 $35.4 $56.8
Accumulated impairment losses (18.6 ) (1.5 ) (20.1 )
2.8 33.9 36.7
Purchase accounting adjustments related to acquisition of
RadioShack de Mexico 0.3 0.3
Foreign currency translation adjustment 1.9 1.9
Goodwill 2.8 18.6 37.6 59.0
2.8 36.1 38.9
Acquisition of dealer 0.1 0.1
Foreign currency translation adjustment 2.2 2.2
Goodwill 2.9 18.6 39.8 61.3
$2.9 $ $38.3 $41.2
SelfInsurance: We are selfinsured for certain claims relating to workerscompensation, automobile, property, employee health care,
and general and product liability claims, although we obtain thirdparty insurance coverage to limit our exposure to these claims. We
estimate our selfinsured liabilities using historical claims experience and actuarial assumptions followed in the insurance industry.
Although we believe we have the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from
recorded selfinsurance liabilities.
Income Taxes: Income taxes are accounted for using the asset and liability method. Deferred taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the enactment date. In addition, we recognize future tax benefits to the extent that
such benefits are more likely than not to be realized. Income tax expense includes U.S. and international income taxes, plus the provision
for U.S. taxes on undistributed earnings of international subsidiaries not deemed to be permanently invested.
Revenue Recognition: Our revenue is derived principally from the sale of name brand and private brand products and services to
consumers. Revenue is recognized, net of an estimate for customer refunds and product returns, when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable, and collectability is
reasonably assured.
Certain products, such as wireless telephone handsets, require the customer to use the services of a thirdparty service provider. The
thirdparty service provider pays us an upfront commission and, in some cases, a monthly recurring residual amount based upon the
ongoing arrangement between the service provider and the customer. Our sale of an activated wireless telephone handset is the single
event required to meet the delivery criterion for both the upfront commission and the residual revenue. Upfront commission revenue, net
of estimated service deactivations, is generally recognized at the time an activated wireless telephone handset is sold to the customer at the
pointofsale. Based on our extensive history in selling activated wireless telephone handsets, we have been able to establish reliable
deactivation estimates. Recurring residual income is recognized as earned under the terms of our contracts with the service providers,
which is typically as the service provider bills its customer, generally on a monthly basis. Sales of wireless handsets and the related
commissions and residual income constitute more than 40 percent of our total revenue. Our three largest thirdparty wireless service
providers are Sprint, AT&T, and TMobile.
Cost of Products Sold: Cost of products sold primarily includes the total cost of merchandise inventory sold, direct costs relating to
merchandise acquisition and distribution
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(including depreciation and excise taxes), costs of services provided, inbound freight expenses to our distribution centers, outbound
freight expenses to our retail outlets, physical inventory valuation adjustments and losses, customer shipping and handling charges, and
certain vendor allowances (see Vendor Allowancesbelow).
Vendor Allowances: We receive allowances from thirdparty service providers and product vendors through a variety of promotional
programs and arrangements as a result of purchasing and promoting their products and services in the normal course of business. We
consider vendor allowances received to be a reduction in the price of a vendor's products or services and record them as a component of
inventory until the product is sold, at which point we record them as a component of cost of products sold unless the allowances represent
reimbursement of specific, incremental and identifiable costs incurred to promote a vendor's products and services. In this case, we record
the vendor reimbursement when earned as an offset to the associated expense incurred to promote the applicable products and/or services.
Advertising Costs: Our advertising costs are expensed the first time the advertising takes place. We receive allowances from certain
thirdparty service providers and product vendors that we record when earned as an offset to advertising expense incurred to promote the
applicable products and/or services only if the allowances represent reimbursement of specific, incremental and identifiable costs (see
Vendor Allowancesabove). Advertising expense was $206.1 million, $193.0 million and $214.5 million for the years ended December
31, 2010, 2009 and 2008, respectively.
StockBased Compensation: We measure all employee stockbased compensation awards using a fair value method and record this
expense in the consolidated financial statements. Our stockbased compensation relates to stock options, restricted stock awards, and
other equitybased awards issued to our employees and directors. On the date that an award is granted, we determine the fair value of the
award and recognize the compensation expense over the requisite service period, which typically is the period over which the award vests.
Fair Value Measurements: Certain assets and liabilities are required to be measured at fair value either on a recurring or nonrecurring
basis. We estimate fair values based on one or more of the following valuation techniques: the market approach (comparable market
prices), the income approach (present value of future income or cash flow), or the cost approach (cost to replace the service capacity of an
asset or replacement cost). See Note 12 Fair Value Measurementsfor additional disclosures of our fair value measurements.
Derivative Instruments and Hedging Activities: We recognize all financial instruments that qualify for derivative instrument accounting at
fair value in the Consolidated Balance Sheets. Changes in the fair value of derivative financial instruments that qualify for hedge
accounting are recorded in stockholdersequity as a component of comprehensive income or as an adjustment to the carrying value of the
hedged item. Changes in fair values of derivatives not qualifying for hedge accounting are reported in earnings.
We maintain internal controls over our hedging activities, which include policies and procedures for risk assessment and the approval,
reporting and monitoring of all derivative financial instrument activities. We monitor our hedging positions and creditworthiness of our
counterparties and do not anticipate losses due to our counterpartiesnonperformance. We do not hold or issue derivative financial
instruments for trading or speculative purposes. To qualify for hedge accounting, derivatives must meet defined correlation and
effectiveness criteria, be designated as a hedge and result in cash flows and financial statement effects that substantially offset those of the
position being hedged.
Foreign Currency Translation: The functional currency of substantially all operations outside the U.S. is the applicable local currency.
Translation gains or losses related to net assets located outside the United States are included as a component of accumulated other
comprehensive (loss) income and are classified in the stockholdersequity section of the accompanying Consolidated Balance Sheets.
Reclassifications: Certain amounts in the December 31, 2009 and 2008, financial statements have been reclassified to conform to the
December 31, 2010, presentation. These reclassifications had no effect on net income or total stockholdersequity as previously reported.
New Accounting Standards: In June 2009, the FASB issued new accounting guidance to improve financial reporting by companies
involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This
guidance was effective for fiscal years beginning after November 15, 2009. We adopted this guidance effective January 1, 2010, and the
adoption had no effect on our consolidated financial statements.
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NOTE 3 SUPPLEMENTAL BALANCE SHEET DISCLOSURES
Accounts and Notes Receivable, Net: As of December 31, 2010 and 2009, we had the following accounts and notes receivable outstanding
in the accompanying Consolidated Balance Sheets:
December 31,
(In millions) 2010 2009
Receivables from vendors and service providers, net $291.0 $247.5
Trade accounts receivable 57.6 49.1
Other receivables 30.3 27.7
Allowance for doubtful accounts (1.4 ) (1.8 )
Accounts and notes receivable, net $377.5 $322.5
Receivables from vendors and service providers relate to earned wireless activation commissions, rebates, residual income, promotions,
marketing development funds and other payments from our thirdparty service providers and product vendors, after taking into account
estimates for service providerscustomer deactivations and nonactivations, which are factors in determining the amount of wireless
activation commissions and residual income earned.
The change in the allowance for doubtful accounts is as follows:
December 31,
(In millions) 2010 2009 2008
Balance at the beginning of the year $1.8 $1.5 $2.5
Provision for bad debts included in selling, general and administrative expense 0.1 0.4 0.6
Uncollected receivables written off, net (0.5 ) (0.1 ) (1.6 )
Balance at the end of the year $1.4 $1.8 $1.5
Other Current Assets, Net:
December 31,
Deferred income taxes $61.4 $68.8
Other 46.7 45.6
Total other current assets, net $108.1 $114.4
Property, Plant and Equipment, Net:
December 31,
Land $2.4 $2.4
Buildings 55.7 55.2
Furniture, fixtures, equipment and software 673.5 663.2
Leasehold improvements 362.8 360.9
Total PP&E 1,094.4 1,081.7
Less accumulated depreciation and amortization (820.1 ) (799.4 )
Property, plant and equipment, net $274.3 $282.3
Other Assets, Net:
December 31,
Notes receivable $9.6 $10.0
Deferred income taxes 45.9 53.1
Other 25.7 29.3
Total other assets, net $81.2 $92.4
Accrued Expenses and Other Current Liabilities:
December 31,
Payroll and bonuses $60.0 $68.7
Insurance 65.0 75.9
Sales and payroll taxes 41.4 41.9
Rent 36.5 36.8
Advertising 26.9 31.4
Gift card deferred revenue 19.5 19.4
Other 68.7 86.6
Total accrued expenses and other current liabilities $318.0 $360.7
Other NonCurrent Liabilities:
December 31,
Deferred compensation $34.6 $33.1
Liability for unrecognized tax benefits 36.6 35.1
Other 21.8 30.5
Total other noncurrent liabilities $93.0 $98.7
NOTE 4 ACQUISITIONS
RadioShack de Mexico: In December 2008, we acquired the remaining interest (slightly more than 50%) of our Mexican joint venture
RadioShack de Mexico, S.A. de C.V. with Grupo Gigante, S.A.B. de C.V. We now own 100% of this subsidiary, which consisted of 200
RadioShackbranded stores and 14 dealers throughout Mexico at the time of acquisition. The purchase price was $44.9 million, which
consisted of $42.2 million in cash paid and transaction costs, net of cash acquired, plus $2.7 million in assumed debt. The acquisition was
accounted for using the purchase method of accounting in accordance with the FASBs accounting guidance for business
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combinations. The purchase price allocation resulted in an excess of purchase price over net tangible assets acquired of $35.5 million, all
of which was attributed to goodwill. The goodwill is not subject to amortization for book purposes but rather an annual test for
impairment. The premium we paid in excess of the fair value of the net assets acquired was based on the established business in Mexico
and our ability to expand our business in Mexico and possibly other countries. The goodwill is not deductible for tax purposes. Results of
the acquired business have been included in our operations since December 1, 2008.
NOTE 5 INDEBTEDNESS AND BORROWING FACILITIES
LongTerm Debt:
December 31,
Five year 2.5% unsecured convertible notes due in 2013 $375.0 $375.0
Tenyear 7.375% unsecured note payable due in 2011 306.8 306.8
Other 1.0 1.0
682.8 682.8
Unamortized debt discounts and other costs (44.2 ) (59.4 )
Basis adjustment due to interest rate swaps 1.2 4.4
639.8 627.8
Less current portion of:
Notes payable 306.8
Unamortized basis adjustment and other costs 1.2
308.0
Total longterm debt $331.8 $627.8
Longterm borrowings outstanding at December 31, 2010, mature as follows:
(In millions)
LongTerm
Borrowings
2011 $306.8
2012
2013 375.0
2014 1.0
2015
2016 and thereafter
Total $682.8
2013 Convertible Notes: In August 2008, we issued $375 million principal amount of convertible senior notes due August 1, 2013, (the
013 Convertible Notes) in a private offering to qualified institutional buyers under Securities and Exchange Commission (SEC)
Rule 144A. The 2013 Convertible Notes were issued at par and bear interest at a rate of 2.50% per annum. Interest is payable
semiannually, in arrears, on February 1 and August 1.
Each $1,000 of principal of the 2013 Convertible Notes is initially convertible, under certain circumstances, into 41.2414 shares of our
common stock (or a total of approximately 15.5 million shares), which is the equivalent of $24.25 per share, subject to adjustment upon
the occurrence of specified events set forth under terms of the 2013 Convertible Notes. Upon conversion, we would pay the holder the
cash value of the applicable number of shares of our common stock, up to the principal amount of the note. Amounts in excess of the
principal amount, if any (the excess conversion value), may be paid in cash or in stock, at our option. Holders may convert their 2013
Convertible Notes into common stock on the net settlement basis described above at any time from May 1, 2013, until the close of
business on July 29, 2013, or if, and only if, one of the following conditions has been met:
During any calendar quarter, and only during such calendar quarter, in which the closing price of our common stock for at least 20
trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter exceeds 130%
of the conversion price per share of common stock in effect on the last day of such preceding calendar quarter
During the five consecutive business days immediately after any 10 consecutive trading day period in which the average trading
price per $1,000 principal amount of 2013 Convertible Notes was less than 98% of the product of the closing price of the
common stock on such date and the conversion rate on such date
We make specified distributions to holders of our common stock or specified corporate transactions occur
The 2013 Convertible Notes were not convertible at the holders' option at any time during 2010 or 2009.
Holders who convert their 2013 Convertible Notes in connection with a change in control may be entitled to a makewhole premium in
the form of an increase in the conversion rate. In addition, upon a change in control, liquidation, dissolution or delisting, the holders of the
2013 Convertible Notes may require us to repurchase for cash all or any portion of their 2013 Convertible Notes for 100% of the principal
amount of the notes plus accrued and unpaid interest, if any. As of December 31, 2010, none of the conditions allowing holders of the
2013 Convertible Notes to convert or requiring us to repurchase the 2013 Convertible Notes had been met.
In connection with the issuance of the 2013 Convertible Notes, we entered into separate convertible note hedge transactions and separate
warrant transactions with respect to our common stock to reduce the potential dilution upon
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conversion of the 2013 Convertible Notes (collectively referred to as the Call Spread Transactions). The convertible note hedges and
warrants will generally have the effect of increasing the economic conversion price of the 2013 Convertible Notes to $36.60 per share of
our common stock, representing a 100% conversion premium based on the closing price of our common stock on August 12, 2008. See
Note 6 StockholdersEquity,for more information on the Call Spread Transactions.
Because the principal amount of the 2013 Convertible Notes will be settled in cash upon conversion, the 2013 Convertible Notes will only
affect diluted earnings per share when the price of our common stock exceeds the conversion price (initially $24.25 per share). We will
include the effect of the additional shares that may be issued from conversion in our diluted net income per share calculation using the
treasury stock method.
When accounting for the 2013 Convertible Notes, we apply accounting guidance related to the accounting for convertible debt instruments
that may be settled in cash upon conversion. This guidance requires us to account separately for the liability and equity components of our
convertible notes in a manner that reflects our nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.
This guidance requires bifurcation of a component of the debt, classification of that component in equity, and then accretion of the
resulting discount on the debt as part of interest expense being reflected in the income statement.
Accordingly, we recorded an adjustment to reduce the carrying value of our 2013 Convertible Notes by $73.0 million and recorded this
amount in stockholdersequity. This adjustment was based on the calculated fair value of a similar debt instrument in August 2008 (at
issuance) that did not have an associated equity component. The annual interest rate calculated for a similar debt instrument in August
2008 was 7.6%. The resulting discount is being amortized to interest expense over the remaining term of the convertible notes. The
carrying value of the 2013 Convertible Notes was $330.8 million and $315.8 million at December 31, 2010 and 2009, respectively. We
recognized interest expense of $9.4 million in both 2010 and 2009 related to the stated 2.50% coupon. We recognized noncash interest
expense of $15.0 million, $13.8 million, and $5.0 million in 2010, 2009 and 2008, respectively, for the amortization of the discount on the
liability component.
Debt issuance costs of $7.5 million were capitalized and are being amortized to interest expense over the term of the 2013 Convertible
Notes. Unamortized debt issuance costs were $3.7 million at December 31, 2010. Debt issuance costs of $1.9 million were related to the
equity component and were recorded as a reduction of additional paidin capital.
For federal income tax purposes, the issuance of the 2013 Convertible Notes and the purchase of the convertible note hedges are treated as
a single transaction whereby we are considered to have issued debt with an original issue discount. The amortization of this discount in
future periods is deductible for tax purposes.
2011 LongTerm Notes: On May 11, 2001, we issued $350 million of 10year 7.375% notes (011 Notes) in a private offering to
qualified institutional buyers under SEC Rule 144A. In August 2001, under the terms of an exchange offering filed with the SEC, we
exchanged substantially all of these notes for a similar amount of publicly registered notes. The exchange resulted in substantially all of
the notes becoming registered with the SEC and did not result in additional debt being issued.
The annual interest rate on the notes is 7.375% per annum, with interest payable on November 15 and May 15 of each year. The notes
contain certain nonfinancial covenants and mature on May 15, 2011. In September 2009, we completed a tender offer to purchase for
cash any and all of these notes. Upon expiration of the offer, $43.2 million of the aggregate outstanding principal amount of the notes was
validly tendered and accepted. We paid a total of $46.6 million, which consisted of the purchase price of $45.4 million for the tendered
notes plus $1.2 million in accrued and unpaid interest, to the holders of the tendered notes. We incurred $0.2 million in expenses and
adjusted the carrying value of the tendered notes by an incremental $0.8 million to reflect a proportionate writeoff of the balance
associated with our fair value hedge included in longterm debt. This transaction resulted in a loss of $1.6 million classified as other loss
on our consolidated statements of income.
A portion of these notes were hedged by our interest rate swaps. Upon repurchase of these notes, we were required to discontinue the
hedge accounting treatment associated with these derivative instruments, which used the shortcut method. The remaining balance
associated with our fair value hedge was recorded as an adjustment to the carrying value of these notes and is being amortized to interest
expense over the remaining term of the notes. At December 31, 2010, this carrying value adjustment was $1.2 million. See Note 11
Derivative Financial Instruments,for more information on our interest rate swaps.
On January 4, 2011, we announced our intention to redeem any and all outstanding 2011 Notes on March 4, 2011. See Note 15
Subsequent Eventsfor more information.
Credit Facilities: Our $325 million credit facility provided us a source of liquidity. Interest charges under this facility were derived using a
base LIBOR rate plus a margin that changed based on our credit ratings. This facility had customary terms and covenants, and we were in
compliance with these covenants at December 31, 2010.
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As of December 31, 2010, we had $292.3 million in borrowing capacity available under the facility. We did not borrow under the facility
during 2010, but we did arrange for the issuance of standby letters of credit totaling $32.7 million under the facility.
This credit facility was scheduled to expire in May of 2011. On January 4, 2011, we terminated the facility and replaced it with a new
$450 million fiveyear assetbased revolving credit facility. See Note 15 Subsequent Eventsfor more information.
NOTE 6 STOCKHOLDERSEQUITY
2005 Share Repurchase Program: In February 2005, our Board of Directors approved a share repurchase program with no expiration date
authorizing management to repurchase up to $250 million of our common stock in open market purchases. During 2008, we repurchased
approximately 0.1 million shares or $1.4 million of our common stock under this program. As of December 31, 2008, there were no
further share repurchases authorized under this program.
2008 Share Repurchase Program: In July 2008, our Board of Directors approved a share repurchase program with no expiration date
authorizing management to repurchase up to $200 million of our common stock. During the third quarter of 2008, we repurchased 6.0
million shares or $110.0 million of our common stock under this program. As of December 31, 2008, there was $90.0 million available for
share repurchases under this program.
In August 2009, our Board of Directors approved a $200 million increase in this share repurchase program. As of December 31, 2009,
$290 million of the total authorized amount was available for share repurchases under this program.
In August 2010, our Board of Directors approved an increase in this share repurchase program from $400 million to $610 million with
$500 million available for share repurchases under this program. In November 2010, we completed a $300 million accelerated share
repurchase (ASR) program that we entered into in August 2010, which is further discussed below. We repurchased 14.9 million shares
under the ASR program. In addition, after the conclusion of the ASR program in November 2010, we repurchased $98.6 million worth of
shares in the open market, representing 4.9 million shares. As of December 31, 2010, $101.4 million of the total authorized amount was
available for share repurchases under this program.
Accelerated Share Repurchase Program: As mentioned above, in August 2010, we entered into an accelerated share repurchase program
with two investment banks to repurchase shares of our common stock under our approved share repurchase program. On August 24, 2010,
we paid $300 million to the investment banks in exchange for an initial delivery of 11.7 million shares to us. At the conclusion of the ASR
program, we received an additional 3.2 million shares. The 14.9 million shares delivered to us was based on the average daily volume
weighted average price of our common stock over a period beginning immediately after the effective date of the ASR agreements and
ending on November 2, 2010.
Dividends Declared: We declared an annual dividend of $0.25 per share in November of 2010, 2009 and 2008. The dividends were paid in
December of each year.
Call Spread Transactions: In connection with the issuance of the 2013 Convertible Notes (see Note 5 Indebtedness and Borrowing
Facilities), we entered into separate convertible note hedge transactions and separate warrant transactions related to our common stock
with Citigroup and Bank of America to reduce the potential dilution upon conversion of the 2013 Convertible Notes.
Under the terms of the convertible note hedge arrangements (the Convertible Note Hedges), we paid $86.3 million for a forward
purchase option contract under which we are entitled to purchase a fixed number of shares of our common stock at a price per share of
$24.25. In the event of the conversion of the 2013 Convertible Notes, this forward purchase option contract allows us to purchase, at a
fixed price equal to the implicit conversion price of common shares issued under the 2013 Convertible Notes, a number of common shares
equal to the common shares that we issue to a note holder upon conversion. Settlement terms of this forward purchase option allow us to
elect cash or share settlement based on the settlement option we choose in settling the conversion feature of the 2013 Convertible Notes.
The Convertible Note Hedges expire on August 1, 2013.
Also concurrent with the issuance of the 2013 Convertible Notes, we sold warrants (the Warrants) permitting the purchasers to acquire
shares of our common stock. The Warrants are currently exercisable for 15.5 million shares of RadioShack common stock at a current
exercise price of $36.60 per share. We received $39.9 million in proceeds for the sale of the Warrants. The Warrants may be settled at
various dates beginning in November 2013 and ending in March 2014. The Warrants provide for net share settlement. In no event will we
be required to deliver a number of shares in connection with the transaction in excess of twice the aggregate number of Warrants.
We determined that the Convertible Note Hedges and Warrants meet the requirements of the FASBs accounting guidance for accounting
for derivative financial instruments indexed to, and potentially settled in, a company's own
55
stock and other relevant guidance and, therefore, are classified as equity transactions. As a result, we recorded the purchase of the
Convertible Note Hedges as a reduction in additional paidin capital and the proceeds of the Warrants as an increase to additional paidin
capital in the Consolidated Balance Sheets, and we will not recognize subsequent changes in the fair value of the agreements in the
financial statements.
In accordance with the FASBs accounting guidance in calculating earnings per share, the Warrants will have no effect on diluted net
income per share until our common stock price exceeds the per share strike price of $36.60 for the Warrants. We will include the effect of
additional shares that may be issued upon exercise of the Warrants using the treasury stock method. The Convertible Note Hedges are
antidilutive and, therefore, will have no effect on diluted net income per share.
Treasury Stock Retirement: In December 2010, our Board of Directors approved the retirement of 45.0 million shares of our common
stock held as treasury stock. These shares returned to the status of authorized and unissued.
NOTE 7 STOCKBASED INCENTIVE PLANS
We have implemented several plans to award employees with stockbased compensation, which are described below.
Incentive Stock Plans: Under the Incentive Stock Plans (ISPs) described below, the exercise price of options must be equal to or greater
than the fair market value of a share of our common stock on the date of grant. The Management Development and Compensation
Committee of our Board of Directors (MD&C) specifies the terms for grants of options under these ISPs; terms of these options may
not exceed ten years. Grants of options generally vest over three years and grants typically have a term of seven or ten years. Option
agreements issued under the ISPs generally provide that, in the event of a change in control, all options become immediately and fully
exercisable. Repricing or exchanging options for lower priced options is not permitted under the ISPs without shareholder approval. A
brief description of each of our incentive stock plans with awards still outstanding is included below:
1997 Incentive Stock Plan (997 ISP): The 1997 ISP permitted the grant of up to 11.0 million shares in the form of incentive stock
options (ISOs), nonqualified stock options (options which are not ISOs) (NQs) and restricted stock. The 1997 ISP expired on
February 27, 2007, and no further grants may be made under this plan.
1999 Incentive Stock Plan (999 ISP): The 1999 ISP permitted the grant of up to 9.5 million shares in the form of NQs. Grants of
restricted stock, performance awards and options intended to qualify as ISOs under the Internal Revenue Code were not authorized under
this plan. The 1999 ISP also permitted directors to elect to receive shares in lieu of cash payments for their annual retainer fees and board
and committee meeting fees. The 1999 ISP expired on February 23, 2009, and no further grants may be made under this plan.
2001 Incentive Stock Plan (001 ISP): The 2001 ISP permitted the grant of up to 9.2 million shares in the form of ISOs and NQs. The
2001 ISP also permitted directors to elect to receive shares in lieu of cash payments for their annual retainer fees and board and committee
meeting fees. The 2001 ISP was terminated in 2009 upon the shareholder approval of the 2009 ISP and no further grants may be made
under this plan.
2009 Incentive Stock Plan (009 ISP): The 2009 ISP permits the grant of up to 11.0 million shares in the form of ISOs, NQs, restricted
stock, restricted stock units, stock appreciation rights, or other stockbased awards. The 2009 ISP also permits directors to elect to receive
shares in lieu of cash payments for their annual retainer fees and board and committee meeting fees. Fullvalue awards granted under the
2009 ISP, such as restricted stock and restricted stock units, will reduce the number of shares available for grant by 1.68 shares for each
share or unit granted. Stock options and stock appreciation rights will reduce the number of shares available for grant by one share for
each stock option or stock appreciation right granted. This plan expires on February 18, 2019. As of December 31, 2010, there were 9.8
million shares available for grants under the 2009 ISP.
56
During the third quarter of 2006, we granted 1.7 million options under the 1997, 1999 and 2001 ISPs to our Chief Executive Officer and
Chief Financial Officer. These options vested over four years from the date of grant and have a term of seven years. We also granted 2.5
million nonplan options to our Chief Executive Officer as part of an inducement grant related to the terms of his employment. These
options vested over four years from the date of grant and have a term of seven years. An additional market condition was attached to 2.0
million of these nonplan options that restricted exercise until certain stock price hurdles had been achieved. The market condition was
met in 2007, and all stock price hurdles have been achieved.
The fair value of the stock options granted during the years ended December 31, 2010, 2009 and 2008, was estimated using the
BlackScholesMerton optionpricing model. The BlackScholesMerton model requires the use of certain subjective assumptions. The
following table lists the assumptions used in calculating the fair value of stock options granted during each year:
Valuation Assumptions(1) 2010 2009 2008
Risk free interest rate(2) 2.3 % 2.0 % 2.8 %
Expected dividend yield 1.3 % 1.8 % 1.0 %
Expected stock price volatility(3) 42.4 % 50.4 % 40.5 %
Expected life of stock options (in years)(4) 5.4 5.4 4.6
(1)Forfeitures are estimated using historical
experience and projected employee turnover.
(2)Based on the U.S. Treasury constant maturity
interest rate whose term is consistent with the
expected life of our stock options.
(3)We consider both the historical volatility of our
stock price, as well as implied volatilities from
exchangetraded options on our stock.
(4)We estimate the expected life of stock options
based upon historical experience.
Information with respect to stock option activity under the above plans is as follows:
Shares
(In
thousands)
Weighted
Average
Exercise
Price
Remaining
Contractual
Life
(in years)
Aggregate
Intrinsic
Value
(in millions)
Outstanding at January 1, 2010 10,014 $20.28
Grants 194 19.23
Exercised (213 ) 15.11
Expired (892 ) 37.30
Forfeited (586 ) 36.01
Outstanding at December 31, 2010 8,517 $17.52 2.8 $34.4
Exercisable at December 31, 2010 7,134 $18.83 2.4 $23.6
The weightedaverage grantdate fair value of stock options granted during 2010, 2009 and 2008, was $7.08, $4.32 and $6.33,
respectively. The total fair value of stock options vested was $8.5 million, $7.2 million and $8.5 million in 2010, 2009 and 2008,
respectively.
The aggregate intrinsic value of options exercised under our stock option plans was $1.3 million, $0.1, and zero for 2010, 2009 and 2008,
respectively. The aggregate intrinsic value is the amount by which the market price of our common stock on the date of exercise exceeded
the exercise price of the option. Net cash proceeds from the exercise of stock options were $4.0 million, $0.7 million and zero in 2010,
2009 and 2008, respectively. The actual income tax benefit realized from stock option exercises was $0.5 million, zero and zero, in 2010,
2009 and 2008, respectively.
The following table summarizes information concerning currently outstanding and exercisable options to purchase our common stock:
(Share amounts in
thousands) Options Outstanding Options Exercisable
Range of Exercise Prices
Shares
Outstanding
at Dec. 31, 2010
Weighted
Average
Remaining
Contractual Life
(in years)
Weighted
Average
Exercise Price
Shares
Exercisable
at Dec. 31, 2010
Weighted
Average
Exercise Price
$7.05 13.58 1,347 5.2 $7.13 403 $7.05
13.82 4,000 2.5 13.82 4,000 13.82
14.71 19.20 1,180 4.2 18.27 754 18.10
19.20 35.08 1,147 1.5 26.57 1,134 26.65
38.35 843 0.2 38.35 843 38.35
$7.05 38.35 8,517 2.8 $17.52 7,134 $18.83
57
Restricted Stock Plan: The 2007 Restricted Stock Plan (007 RSP) permitted the grant of up to 0.5 million shares of restricted stock to
selected officers of the company, as determined by the MD&C. This plan was terminated in 2009 upon shareholder approval of the 2009
ISP, and no further grants may be made under this plan. Transactions related to restricted stock awards issued under the 2007 RSP and the
2009 ISP for the year ended December 31, 2010, are summarized as follows:
(In thousands, except per share amounts) Shares
Weighted
Average
Fair Value
Per Share
Nonvested at January 1, 2010 353 $9.99
Granted 298 19.21
Vested or released (1) (191 ) 13.68
Canceled or forfeited (6 ) 14.90
Nonvested at December 31, 2010 454 $14.43
(1)For plan participants age 55 and older, certain
granted but unvested shares are released from the
plan for tax withholdings on the participants
behalf.
We granted approximately 298,000, 346,000, and 158,000 shares of restricted stock in 2010, 2009 and 2008, respectively, under these
plans.
Restricted stock awards are valued at the market price of a share of our common stock on the date of grant. In general, these awards vest at
the end of a threeyear period from the date of grant and are expensed on a straightline basis over that period, which is considered to be
the requisite service period. This expense totaled $4.7 million, $1.8 million, and $1.5 million for the years ended December 31, 2010,
2009 and 2008, respectively.
The weightedaverage grantdate fair value per share of restricted stock awards granted was $19.21, $7.05 and $18.15 in 2010, 2009 and
2008, respectively. The total fair value of restricted stock awards vested was approximately $1.7 million, $1.3 million and $1.1 million in
2010, 2009 and 2008, respectively.
The compensation cost charged against income for all stockbased compensation plans was $9.9 million, $12.1 million and $12.8 million
in 2010, 2009 and 2008, respectively. The total income tax benefit recognized for all stockbased compensation plans was $2.6 million,
$3.9 million and $3.4 million in 2010, 2009 and 2008, respectively. At December 31, 2010, there was $4.0 million of unrecognized
compensation expense related to the unvested portion of our stockbased awards that is expected to be recognized over a weighted
average period of 1.2 years.
Deferred Stock Units: In 2004, the stockholders approved the RadioShack 2004 Deferred Stock Unit Plan for NonEmployee Directors
(Deferred Plan). The Deferred Plan replaced the onetime and annual stock option grants to nonemployee directors (Directors) as
specified in the 1997, 1999 and 2001 ISPs. New Directors received a onetime grant of 5,000 deferred stock units (Units) on the date
they attended their first Board meeting. The Deferred Plan also specified that each Director who had served one year or more as of June 1
of any year would automatically be granted 3,500 Units on the first business day of June of each year in which he or she served as a
Director.
In February 2007, the Board of Directors amended the Deferred Plan to provide that, in lieu of the original amounts described above, each
nonemployee director now receives a onetime initial grant of units equal to the number of shares of our common stock that represent a
fair market value of $150,000 on the grant date, and an annual grant of units equal to the number of shares of our common stock that
represent a fair market value of $105,000 on the annual grant date.
Under the Deferred Plan, onethird of the Units vest annually over three years from the date of grant. Vesting of outstanding awards is
accelerated under certain circumstances. At termination of service, death, disability or change in control of RadioShack, Directors will
receive shares of common stock equal to the number of vested Units. Directors may receive these shares in a lump sum or they may defer
receipt of these shares in equal installments over a period of up to ten years. We granted approximately 29,000, 45,000, and 59,000 Units
in 2010, 2009 and 2008, respectively. The weightedaverage grantdate fair value per Unit granted was $21.75, $13.97 and $14.24 in
2010, 2009 and 2008, respectively. There were approximately 211,000 Units outstanding and 705,000 Units available for grant at
December 31, 2010.
58
NOTE 8 EMPLOYEE BENEFIT PLANS
The following benefit plans were in place during the periods covered by the financial statements.
RadioShack 401(k) Plan: The RadioShack 401(k) Plan (01(k) Plan), a defined contribution plan, was most recently amended and
restated effective July 1, 2010, and allows a participant to defer, by payroll deductions, from 1% to 75% of the participants annual
compensation, limited to certain annual maximums set by the Internal Revenue Code. The 401(k) Plan also presently provides that our
contribution to each participants account maintained under the 401(k) Plan be an amount equal to 100% of the participants
contributions up to 4% of the participants annual compensation. This percentage contribution made by us is discretionary and may
change in the future. Our contributions go directly to the 401(k) Plan and are made in cash and invested according to the investment
elections made by the participant for the participants own contributions. Company contributions to the 401(k) Plan were $6.2 million,
$6.6 million and $7.2 million for 2010, 2009 and 2008, respectively.
Supplemental Executive Retirement Plan: Prior to January 1, 2006, certain officers of the Company were participants in RadioShacks
Salary Continuation Plan (SCP) or its Deferred Compensation Plan (DCPand, together with the SCP, the Plans), which provided
a defined benefit to be paid out over a tenyear period upon retirement between the ages of 55 and 70. Participation in the Plans and the
benefit payments were based solely on the discretion and approval of the MD&C, and the benefit payments did not bear any relationship
to a participants present compensation, final compensation or years of service. We accrued benefit payments earned based on the
provisions set forth by the MD&C for each individual person. Based on the method by which the Plans were administered and because
there was not a specific plan governing the benefit payment calculation, the accounting and disclosure provisions of the FASBs
accounting guidance for pensions were not previously required.
The Company adopted an unfunded Supplemental Executive Retirement Plan (SERP) effective January 1, 2006, for selected officers of
the Company. The SERP was most recently amended and restated effective as of December 31, 2010. Upon retirement at age 55 years or
older, participants in the SERP are eligible to receive, for ten years, an annual amount equal to a percentage of the average of their five
highest consecutive years of compensation (base salary and bonus), to be paid in 120 monthly installments. The amount of the percentage
increases by 2 % for each year of participation in the SERP, up to a maximum of 50%.
To be a participant in the SERP, officers who were participants in the SCP or DCP had to withdraw from the applicable plan and would
then only receive benefits under the SERP. The benefits for these officers are calculated under the SERP using a formula that calculates
the benefit under each plan (SERP, SCP or DCP) and pays the participant the highest dollar benefit.
If a SERP participant terminates employment due to retirement or disability between the ages of 55 and 70, the participant is entitled to
their normal vested SERP benefit, paid in 120 equal monthly payments.
Based on the effective date of the SERP of January 1, 2006, fiscal year 2006 was the initial year in which an actuarial valuation was
performed. The projected benefit obligation at the beginning of 2006 represents the actuarial valuation that was performed as of January 1,
2006, based on the information and assumptions developed at that time. Participants in the SERP as of January 1, 2006, were given credit
for prior service as an officer of the Company. Therefore, this service credit generated prior service costs that are not required to be
immediately recognized, but that are amortized for purposes of the net periodic benefit cost calculation over the estimated average
remaining service period for active employee participants.
We use the last day of our fiscal year as the measurement date for determining SERP obligations and conduct an actuarial valuation at that
date. The change in benefit obligation, plan assets, and funded status for 2010 and 2009 are as follows:
Year Ended
December 31,
Change in benefit obligation:
Benefit obligation at beginning of year $24.0 $26.5
Service cost benefits earned during the year 0.6 0.5
Interest cost on projected benefit obligation 1.0 1.4
Actuarial loss 0.5 0.8
Benefits paid (4.9 ) (5.2 )
Benefit obligation at end of year 21.2 24.0
Change in plan assets:
Fair value of plan assets at beginning of year
Employer contribution 4.9 5.2
Benefits paid (4.9 ) (5.2 )
Fair value of plan assets at end of year
Underfunded status $(21.2 ) $(24.0 )
The accumulated benefit obligation was $20.6 million and $22.9 million at December 31, 2010 and 2009, respectively.
59
Amounts recognized as liabilities in the Consolidated Balance Sheets consist of:
December 31,
Accrued expenses and other current liabilities $3.9 $5.0
Other noncurrent liabilities 17.3 19.0
Net amount recognized $21.2 $24.0
The cost of the SERP defined benefit plan included the following components for the last three years:
(In millions) 2010 2009 2008
Service cost benefits earned during the year $0.6 $0.5 $0.6
Interest cost on projected benefit obligation 1.0 1.4 1.6
Amortization of prior service cost 0.1 0.1 0.1
Net periodic benefit cost $1.7 $2.0 $2.3
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss (pretax) included prior
service cost of $0.7 million, $0.8 million, and $0.9 million at December 31, 2010, 2009 and 2008, respectively, and an actuarial loss of
$0.2 million and gain of $0.3 million at December 31, 2010 and 2009, respectively. The amount of prior service cost that will be
amortized from accumulated other comprehensive loss into net periodic benefit cost in 2011 is estimated to be $0.1 million.
Assumptions used to determine benefit obligations at December 31 were as follows:
2010 2009 2008
Discount rate 4.1 % 4.7 % 5.9 %
Rate of compensation increase 3.5 % 3.5 % 3.5 %
Actuarial assumptions used to determine net periodic benefit cost for the years ended December 31 were as follows:
2010 2009 2008
Discount rate 4.7 % 5.9 % 5.7 %
Rate of compensation increase 3.5 % 3.5 % 3.5 %
We base our discount rate on the rates of return available on highquality bonds with maturities approximating the expected period over
which the pension benefits will be paid. The rate of compensation increase is based on historical and expected increases.
As the SERP is an unfunded plan, benefit payments are made from the general assets of RadioShack. The expected future benefit
payments based upon the assumptions described above and including benefits attributable to future employee service for the following
periods are as follows:
(In millions)
2011 $4.1
2012 3.5
2013 3.4
2014 3.0
2015 2.5
2016 through 2020 4.0
In 2011, we expect to make contributions to the plan of $4.1 million in the form of benefit payments.
NOTE 9 INCOME TAXES
The following is a reconciliation of the federal statutory income tax rate to our income tax expense:
(In millions) 2010 2009 2008
Components of income from continuing operations:
United States $334.0 $326.4 $289.6
Foreign 2.1 2.1 9.9
Income before income taxes 336.1 328.5 299.5
Statutory tax rate x 35.0 % x 35.0 % x 35.0 %
Federal income tax expense at statutory rate 117.6 115.0 104.8
State income taxes, net of federal benefit 9.2 9.2 8.4
Unrecognized tax benefits 1.1 (3.1 ) 2.3
Other, net 2.1 2.4 (5.4 )
Total income tax expense $130.0 $123.5 $110.1
Effective tax rate 38.7 % 37.6 % 36.8 %
The components of income tax expense were as follows:
(In millions) 2010 2009 2008
Current:
Federal $101.9 $105.3 $92.2
State 13.7 7.1 14.0
Foreign 2.4 2.6 (7.8 )
118.0 115.0 98.4
Deferred:
Federal 10.7 8.6 8.9
State 1.1 0.2 2.8
Foreign 0.2 (0.3 )
12.0 8.5 11.7
Income tax expense $130.0 $123.5 $110.1
60
The tax effect of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:
December 31,
Deferred tax assets:
Depreciation and amortization $16.6 $22.9
Insurance reserves 15.5 18.0
Deferred compensation 13.7 13.6
Deferred revenue 13.6 7.9
Reserve for estimated wireless service deactivations 12.0 14.1
Indirect effect of unrecognized tax benefits 10.1 10.1
Accrued average rent 8.5 8.7
Convertible debt original issue discount 1.9 2.5
Other 36.4 42.7
Total deferred tax assets 128.3 140.5
Deferred tax liabilities:
Deferred taxes on foreign operations 6.6 6.2
Other 14.4 12.4
Total deferred tax liabilities 21.0 18.6
Net deferred tax assets $107.3 $121.9
Deferred tax assets and liabilities were included in the Consolidated Balance Sheets as follows:
December 31,
Other current assets $61.4 $68.8
Other noncurrent assets 45.9 53.1
Net deferred tax assets $107.3 $121.9
We anticipate that we will generate sufficient pretax income in the future to realize the full benefit of U.S. deferred tax assets related to
future deductible amounts. Accordingly, a valuation allowance was not required at December 31, 2010 or 2009. We have not recorded
deferred U.S. income taxes or foreign withholding taxes on temporary differences resulting from earnings for certain foreign subsidiaries
that are considered permanently invested outside the United States. The cumulative amount of these earnings and the amount of the
unrecognized deferred tax liability related to these earnings were not material to the financial statements.
A reconciliation of the consolidated liability for gross unrecognized income tax benefits (excluding interest) from January 1, 2008, to
December 31, 2010, is as follows:
(In millions) 2010 2009 2008
Balance at beginning of year $26.5 $38.1 $45.6
Increases related to prior period tax positions 1.5
Decreases related to prior period tax positions (0.4 ) (5.5 ) (2.8 )
Increases related to current period tax positions 1.7 1.9 4.6
Settlements (1.1 ) (7.2 ) (8.8 )
Lapse in applicable statute of limitations (0.8 ) (0.8 ) (2.0 )
Balance at end of year $25.9 $26.5 $38.1
The amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2010, was $20.1
million.
We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of December 31, 2010
and 2009, we had $10.8 million and $10.1 million, respectively, of accrued interest expense associated with uncertain tax positions.
Income tax expense included interest associated with uncertain tax positions of $1.8 million, $3.7 million, and $5.5 million, in 2010, 2009,
and 2008, respectively.
We do not expect significant changes in unrecognized tax benefit liabilities over the next twelve months. Our unrecognized tax benefit
liabilities are classified in other noncurrent liabilities on the Consolidated Balance Sheets as of December 31, 2010.
RadioShack Corporation and its U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. The U.S. federal
statute of limitations is closed for all years prior to 2004. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging
from 3 to 5 years. Our tax returns are currently under examination in various federal, state and foreign jurisdictions. While one or more of
these examinations may be concluded within the next twelve months, we do not expect this to have a significant effect on our results of
operations or financial position. Our effective tax rate for future periods may be affected by the settlement of tax controversies or by the
expiration of the statute of limitations for periods for which a liability has been established.
61
NOTE 10 NET INCOME PER SHARE
Basic net income per share is computed based only on the weighted average number of common shares outstanding for each period
presented. Diluted net income per share reflects the potential dilution that would have occurred if securities or other contracts to issue
common stock were exercised, converted, or resulted in the issuance of common stock that would have then shared in the earnings of the
entity.
The following table reconciles the numerator and denominator used in the basic and diluted earnings per share calculations for the years
ended December 31, 2010, 2009 and 2008.
(In millions, except
per share amounts) 2010 2009 2008
Numerator:
Net income $206.1 $205.0 $189.4
Denominator:
Weightedaverage common shares outstanding 120.5 125.4 129.0
Dilutive effect of stockbased awards 2.2 0.7 0.1
Weighted average shares for diluted net income per share 122.7 126.1 129.1
Basic net income per share $1.71 $1.63 $1.47
Diluted net income per share $1.68 $1.63 $1.47
Common stock equivalents that were not included in the
calculation of diluted net income per share:
Employee stock options (1) 1.8 4.6 8.6
Warrants to purchase common stock (1) 15.5 15.5 15.5
Convertible debt Instruments (2) 15.5 15.5 15.5
(1)These common stock equivalents were excluded
because their exercise prices ($36.60 per share for
the warrants) exceeded the average market price of
our common stock during these periods, and the
effect of their inclusion would be antidilutive. These
securities could be dilutive in future periods.
(2)These common stock equivalents were excluded
because the conversion price ($24.25 per share)
exceeded the average market price of our common
stock during these periods, and the effect of their
inclusion would be antidilutive. These securities
could be dilutive in future periods.
NOTE 11 DERIVATIVE FINANCIAL INSTRUMENTS
We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under
the FASBs accounting guidance on the accounting for derivative instruments and hedging activities. We do not hold or issue derivative
financial instruments for trading or speculative purposes. To qualify for hedge accounting, derivatives must meet defined correlation and
effectiveness criteria, be designated as a hedge and result in cash flows and financial statement effects that substantially offset those of the
position being hedged.
By using these derivative instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the potential
failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive,
the counterparty owes us, which creates credit risk for us. We minimize this credit risk by entering into transactions with high quality
counterparties and do not anticipate significant losses due to our counterpartiesnonperformance. Market risk is the adverse effect on the
value of a financial instrument that results from a change in the rate or value of the underlying item being hedged. We minimize this
market risk by establishing and monitoring internal controls over our hedging activities, which include policies and procedures that limit
the types and degree of market risk that may be undertaken.
Interest Rate Swap Agreements: We use interest raterelated derivative instruments to manage our exposure to fluctuations of interest
rates. In June and August 2003, we entered into interest rate swap agreements with underlying notional amounts of debt of $100 million
and $50 million, respectively, and both with maturities in May 2011. These swaps effectively convert a portion of our longterm fixed
rate debt to a variable rate. We entered into these agreements to balance our fixed versus floating rate debt portfolio to continue to take
advantage of lower shortterm interest rates. Under these agreements, we have contracted to pay a variable rate of LIBOR plus a markup
and to receive fixed rates of 7.375%.
The swap agreements were originally designated as fair value hedges of the related debt and met the requirements to be accounted for
under the shortcut method, resulting in no ineffectiveness in the hedging relationship. The periodic interest settlements, which occur at
the same interval as the interest payments on the 2011 Notes, are recorded as interest expense. The gain or loss on these derivatives, as
well as the offsetting loss or gain on the related debt, was recognized in current earnings, but had a net earnings effect of zero due to
shortcut method accounting.
62
In September 2009, we repurchased $43.2 million of our 7.375% unsecured notes due in 2011. A portion of these notes were hedged by
our interest rate swaps. Upon repurchase of these notes, we were required to discontinue the hedge accounting treatment associated with
these derivative instruments which used the shortcut method. We intend to hold these instruments until their maturities. Changes in fair
value of these instruments are recorded in earnings as an adjustment to interest expense. These adjustments resulted in increases in interest
expense of $3.4 million and $0.6 million in 2010 and 2009, respectively.
NOTE 12 FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Basis of Fair Value Measurements
Fair Value
of Assets
(Liabilities)
Quoted
Prices
in Active
Markets for
Identical
Items
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(In millions)
As of December 31, 2010
Derivatives Not Designated as
Hedging Instruments:
Interest rate swaps (1) (2) $1.9 $1.9
As of December 31, 2009
Derivatives Not Designated as
Hedging Instruments:
Interest rate swaps (1) (3) $5.3 $5.3
(1) These interest rate swaps serve as economic hedges on our 2011 Notes
(2) Included in other current assets
(3) Included in other assets, net
The FASBs accounting guidance utilizes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair
value into three broad levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly; these include quoted
prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are
not active
Level 3: Unobservable inputs that reflect the reporting entitys own assumptions
The fair values of our interest rate swaps are the estimated amounts we would have received to settle the agreements. Other financial
instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable,
accrued liabilities, and longterm debt. With the exception of longterm debt, the financial statement carrying amounts of these items
approximate their fair values due to their shortterm nature. Estimated fair values for longterm debt have been determined using recent
trading activity and/or bid/ask spreads.
Carrying amounts and the related estimated fair value of our debt financial instruments are as follows:
December 31, 2010 December 31, 2009
(In millions)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Total debt $639.8 $713.1 $627.8 $740.2
The fair values of our 2013 Convertible Notes and 2011 Notes at December 31, 2010, were $400.7 million and $311.4 million,
respectively, compared with $422.5 million and $316.7, respectively, at December 31, 2009.
63
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Basis of Fair Value Measurements
Fair Value
of Assets
(Liabilities)
Quoted
Prices
in Active
Markets for
Identical
Items
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(In millions)
Year Ended December 31, 2010
Longlived assets held and used $0.9 $0.9
Year Ended December 31, 2009
Longlived assets held and used $1.0 $1.0
In 2010, longlived assets held and used in certain locations of our U.S. RadioShack companyoperated stores segment and certain test
store formats classified as other operations with a total carrying value of $4.9 million were written down to their fair value of $0.9 million,
resulting in an impairment charge of $4.0 million that was included in earnings for the period. The inputs used to calculate the fair value
of these longlived assets included the projected cash flows and a riskadjusted rate of return that we estimated would be used by a
market participant in valuing these assets.
NOTE 13 COMMITMENTS AND CONTINGENCIES
Lease Commitments: We lease rather than own most of our facilities. Our lease agreements expire at various dates through 2025. Some of
these leases are subject to renewal options and provide for the payment of taxes, insurance and maintenance. Our retail locations comprise
the largest portion of our leased facilities. These locations are primarily in major shopping malls and shopping centers owned by other
companies. Some leases are based on a minimum rental plus a percentage of the store's sales in excess of a stipulated base figure
(contingent rent). Certain leases contain escalation clauses. We also lease a distribution center in Mexico and our corporate headquarters.
Additionally, we lease automobiles and information systems equipment.
Future minimum rent commitments at December 31, 2010, under noncancelable operating leases (net of immaterial amounts of sublease
rent income), are included in the following table.
(In millions)
Operating
Leases
2011 $196.7
2012 140.1
2013 93.7
2014 60.1
2015 39.1
2016 and thereafter 33.2
Total minimum lease payments $562.9
Rent Expense:
(In millions) 2010 2009 2008
Minimum rents $229.0 $228.7 $228.8
Occupancy cost 37.6 39.4 38.2
Contingent rents 23.6 23.7 27.8
Total rent expense $290.2 $291.8 $294.8
Litigation: On October 10, 2008, the Los Angeles County Superior Court granted our second Motion for Class Decertification in the class
action lawsuit of Brookler v. RadioShack Corporation. Plaintiffsclaims that we violated California's wage and hour laws relating to meal
periods were originally certified as a class action on February 8, 2006. Our first Motion for Decertification of the class was denied on
August 29, 2007. After a California Appellate Court's favorable decision in the similar case of Brinker Restaurant Corporation v. Superior
Court, we again sought class decertification. Based on the California Appellate Courts decision in Brinker, the trial court granted our
second motion. The plaintiffs in Brookler have appealed this ruling. Due to the unsettled nature of California state law regarding the
employersstandard of liability for meal periods, we and the Brookler plaintiffs requested that the California appellate court stay its
ruling on the plaintiffsappeal of the class decertification ruling, pending the California Supreme Courts decision in Brinker. The
appellate court denied this joint motion and then heard oral arguments for this matter on August 5, 2010. On August 26, 2010, the Court of
Appeals reversed the trial courts decertification of the class, and our Petition for Rehearing was denied on September 14, 2010. On
September 28, 2010, we filed a Petition for Review with the California Supreme Court, which is currently pending. The outcome of this
action is uncertain and the ultimate resolution of this matter could have a material adverse effect on our financial position, results of
operations, and cash flows in the period in which any such resolution is recorded.
On June 7, 2007, a purported class action lawsuit, Richard Stuart v. RadioShack Corporation, et al, was filed against RadioShack in the
U.S. District Court for the Northern District of California, based on allegations that RadioShack failed to properly reimburse its employees
in California for
64
mileage expenses associated with their use of personal vehicles to make transfers of merchandise between our stores. On February 9,
2009, the court granted the plaintiffsMotion for Class Certification. Following mediation, the parties reached agreement to settle the
lawsuit for a total of $4.5 million, subject to court approval. On April 19, 2010, the court granted preliminary approval of the settlement,
and on August 9, 2010, granted final approval. The settlement proceeds were delivered to the claim administrator for distribution to the
class members and others on October 1, 2010.
Separate from our wireless service provider settlement agreement discussed in Note 14, we notified TMobile that they had breached their
agreement with us. Under the agreement, TMobile has until March 21, 2011, to cure the breaches. In the event that TMobile is unable
to cure the breaches, we have the right to terminate the agreement. The outcome of this action is uncertain and the ultimate resolution of
this matter could have a material adverse effect on our results of operations, financial condition and business operations.
We have various other pending claims, lawsuits, disputes with third parties, investigations and actions incidental to the operation of our
business, including certain cases discussed generally below under Continuing Lease Obligations.Although occasional adverse
settlements or resolutions may occur and negatively affect earnings in the period or year of settlement, it is our belief that their ultimate
resolution will not have a material adverse effect on our financial position or liquidity.
Continuing Lease Obligations: We have obligations under retail leases for locations that we assigned to other businesses. The majority of
these lease obligations arose from leases for which CompUSA Inc. (CompUSA) assumed responsibility as part of its purchase of our
Computer City, Inc. subsidiary in August 1998. Because the company that assumed responsibility for these leases has ceased operations,
we may be responsible for rent due under the leases.
Following an announcement by CompUSA in February 2007 of its intention to close as many as 126 stores and an announcement in
December 2007 that it had been acquired by Gordon Brothers Group, CompUSAs stores ceased operations in January 2008. We may be
responsible for rent due on a portion of the leases that relate to the closed stores. As of February 3, 2011, we had been named as a
defendant in a total of 13 lawsuits from lessors seeking payment from us, 12 of which have been resolved.
Based on all available information pertaining to the status of these lawsuits, and after applying the FASBs accounting guidance on
accounting for contingencies, the balance of our accrual for these obligations was $2.4 million and $6.2 million at December 31, 2010 and
2009, respectively. We will continue to monitor this situation for new information on outstanding litigation and settlements, but we do not
consider the amounts of these obligations, both individually and in the aggregate, to be material to our results of operations or financial
position.
Purchase Obligations: We had purchase obligations of $291.8 million at December 31, 2010, which include product commitments,
marketing agreements and freight commitments. Of this amount, $268.4 million related to 2011.
NOTE 14 WIRELESS SERVICE PROVIDER SETTLEMENT AGREEMENT
The business terms of our relationships with our wireless service providers are governed by our wireless reseller agreements. These
contracts are complex and include provisions determining our upfront commission revenue, net of chargebacks for wireless service
deactivations; our acquisition and return of wireless handsets; and, in some cases, future residual revenue, performance targets and
marketing development funds. Disputes occasionally arise between the parties regarding the interpretation of these contract provisions.
Certain disputes arose with one of the Companys wireless service providers pertaining to upfront commission revenue for activations
prior to July 1, 2010, and related chargebacks for wireless service deactivations. Negotiations regarding resolution of these disputes
culminated in the signing of a settlement agreement in July 2010. In connection with the decision to settle these disputes, the Company
considered the following: the timing of cash outflows and inflows in connection with the disputed upfront commission revenue and related
chargebacks, and the estimated future residual revenue; the benefits of settling the disputes and agreeing to enter into good faith
negotiations with the wireless service provider in the third quarter of 2010 to modify the commission and chargeback provisions of our
wireless reseller agreement; and the risks associated with the ultimate realization of the estimated future residual revenue. Key elements of
the settlement agreement include the following:
All disputes relating to upfront commission revenue for activations prior to July 1, 2010, and related chargebacks were settled.
The wireless service provider agreed to pay $141 million to the Company on or before July 30, 2010.
The Company and the wireless service provider agreed to enter into good faith negotiations in the third quarter of 2010 to modify the
commission and chargeback provisions of our wireless reseller agreement.
65
Beginning on July 1, 2010, the wireless service provider was no longer obligated to pay future residual revenue amounts to the
Company for a period of time for customers activated on or before June 30, 2010. For the first six months of 2010, these residual
revenue amounts averaged approximately $9 million per quarter. Based on this average, we would receive no residual revenue
payments from this wireless service provider for eight quarters beginning with the third quarter of 2010 under the terms of the
settlement agreement.
The effects of the settlement agreement have been reflected in net sales and operating revenues for 2010.
In the third quarter of 2010, we reached an agreement with this wireless service provider to modify the commission and chargeback
provisions of our wireless reseller agreement. Based on the terms of the settlement agreement, the terms of the amended wireless reseller
agreement, and the performance of our business with this wireless service provider, we do not believe that these events will have a
material effect on our results of operations for future periods.
NOTE 15 SUBSEQUENT EVENTS
On January 4, 2011, we terminated our $325 million credit facility and entered into a fiveyear, $450 million revolving credit agreement
(016 Credit Facility) with a group of lenders with Bank of America, N.A., as administrative agent. The 2016 Credit Facility expires on
January 4, 2016. The 2016 Credit Facility may be used for general corporate purposes and the issuance of letters of credit. This facility is
secured by substantially all of the Companys inventory, accounts receivable, cash and cash equivalents, and certain other personal
property.
Borrowings under the 2016 Credit Facility are subject to a borrowing base of certain secured assets and bear interest, at our option, at a
banks prime rate plus 1.25% to 1.75% or LIBOR plus 2.25% to 2.75%. The applicable rates in these ranges are based on the aggregate
average availability under the facility.
The 2016 Credit Facility also contains a $150 million sublimit for the issuance of standby and commercial letters of credit. Issued letters
of credit will reduce the amount available under the credit facility. Letter of credit fees are 2.25% to 2.75% for standby letters of credit or
1.125% to 1.375% for commercial letters of credit.
We pay commitment fees to the lenders at an annual rate of 0.50% of the unused amount of the credit facility. No borrowings, other than
the issuance of letters of credit totaling $32.8 million as of February 15, 2011, have been made under the 2016 Credit Facility.
The 2016 Credit Facility contains affirmative and negative covenants that, among other things, restrict certain payments, including
dividends and share repurchases. Also, we will be subject to a minimum consolidated fixed charge coverage ratio if our unused amount
under the facility is less than the greater of 12.5% of the maximum borrowing amount and $45.0 million.
We are generally free to pay dividends and repurchase shares as long as the current and projected unused amount under the facility is
greater than 17.5% of the maximum borrowing amount and the minimum consolidated fixed charge coverage ratio is maintained. We may
pay dividends and repurchase shares without regard to the Company's consolidated fixed charge coverage ratio as long as the current and
projected unused amount under the facility is greater than 75% of the maximum borrowing amount and cash on hand is used for the
dividends or share repurchases.
As a condition of the 2016 Credit Facility, we were required to eliminate the restrictive covenants associated with our 2011 Notes. On
January 4, 2011, we transferred $318.1 million to the trustee for the 2011 Notes that will be used to pay principal and interest amounts due
on redemption of these notes. In connection with the deposit of these funds, the trustee acknowledged the satisfaction and discharge of the
indenture as to the 2011 Notes, which had the effect of eliminating the restrictive covenants referred to above. This redemption is
currently scheduled to take place on March 4, 2011. Any amounts remaining with the trustee after the redemption of the 2011 Notes will
be returned to us.
NOTE 16 SEGMENT REPORTING
We have two reportable segments, U.S. RadioShack companyoperated stores and kiosks. The U.S. RadioShack companyoperated stores
segment consists solely of our 4,486 U.S. companyoperated retail stores, all operating under the RadioShack brand name. Our kiosks
segment consists of our network of 1,267 kiosks, primarily located in Target and Sams Club locations. In April 2009 we agreed with
Sprint to cease our arrangement to jointly operate the Sprintbranded kiosks in operation at that date. This agreement allowed us to
operate these kiosks under the Sprint name for a reasonable period of time, allowing us to transition the kiosks to a new format. In August
2009, we transitioned these kiosks to multiple wireless carrier RadioShackbranded locations. They are now managed and reported as
extensions of existing RadioShack companyoperated stores located in the same shopping malls. Both of our reportable segments engage
in the sale of consumer electronics products; however, our kiosks
66
primarily offer wireless products and associated accessories. These reportable segments are managed separately due to our kiosksnarrow
product offerings and performance relative to size.
We evaluate the performance of each reportable segment based on operating income, which is defined as sales less cost of products sold
and certain direct operating expenses, including labor, rent, and occupancy costs. Asset balances by reportable segment have not been
included in the segment table below, as these are managed on a companywide level and are not fully allocated to each segment for
management reporting purposes. Amounts in the other category reflect our business activities that are not separately reportable, which
include sales to our independent dealers, sales to other third parties through our service centers, sales generated by our
www.radioshack.com website and our Mexican subsidiary, sales to commercial customers, and sales to other third parties through our
global sourcing and manufacturing operations.
(In millions) 2010 2009 2008
Net sales and operating revenues:
U.S. RadioShack companyoperated stores $3,808.2 $3,650.9 $3,611.1
Kiosks 271.6 250.0 283.5
Other (1) 392.9 375.1 329.9
$4,472.7 $4,276.0 $4,224.5
Operating income:
Kiosks 21.2 15.4 8.4
Other (1) 41.8 39.9 44.1
738.4 758.1 768.9
Unallocated (2) (3) (363.0 ) (388.7 ) (446.7 )
Operating income 375.4 369.4 322.2
Interest income 2.6 4.8 14.6
Interest expense (41.9 ) (44.1 ) (34.9 )
Other loss (1.6 ) (2.4 )
Income before income taxes $336.1 $328.5 $299.5
Depreciation and amortization:
Kiosks 2.3 3.2 5.8
Other 3.7 5.8 1.8
51.4 54.8 60.5
Unallocated (4) 32.8 38.1 38.6
$84.2 $92.9 $99.1
(1) Net sales and operating revenues and operating income for 2010 and 2009 include the consolidation of our
Mexican subsidiary.
(2) The unallocated category included in operating income relates to our overhead and corporate expenses that are
not allocated to our operating segments for management reporting purposes. Unallocated costs include
corporate departmental expenses such as labor and benefits, as well as advertising, insurance, distribution and
information technology costs plus certain unusual or infrequent gains or losses.
(3) Unallocated operating income for 2008 includes net charges aggregating $12.1 million associated with the
amended lease for our corporate headquarters.
(4) Depreciation and amortization included in the unallocated category primarily relate to our information
technology assets.
67
Product Sales Information: Our consolidated net sales and operating revenues are summarized by groups of similar products and services,
as follows:
Consolidated Net Sales and Operating Revenues
(In millions) 2010 2009 2008
Wireless $2,128.2 47.6 % $1,634.3 38.2 % $1,388.5 32.9 %
Accessory 858.2 19.2 1,036.3 24.2 1,140.0 27.0
Modern home 516.6 11.5 585.3 13.7 556.8 13.2
Power 222.0 5.0 225.3 5.3 243.1 5.7
Technical 179.5 4.0 181.3 4.2 184.5 4.4
Service 130.3 2.9 114.5 2.7 93.8 2.2
Other sales 25.4 0.6 35.4 0.8 52.4 1.2
Consolidated net sales and
operating revenues $4,472.7 100.0 % $4,276.0 100.0 % $4,224.5 100.0 %
NOTE 17 QUARTERLY DATA (UNAUDITED)
As our operations are predominantly retail oriented, our business is subject to seasonal fluctuations, with the fourth quarter generally being
the most significant in terms of sales and profits because of the winter holiday selling season.
Three Months Ended
(In millions, except per share amounts) Mar. 31 Jun. 30 Sep. 30 Dec. 31
Year ended December 31, 2010:
Net sales and operating revenues $1,041.7 $1,011.4 $1,051.8 $1,367.8
Cost of products sold 549.8 530.8 574.8 806.7
Gross profit 491.9 480.6 477.0 561.1
SG&A expense 380.7 364.5 371.1 438.4
Depreciation and amortization 20.1 19.4 18.5 18.5
Impairment of longlived assets 0.3 0.4 2.4 0.9
Total operating expenses 401.1 384.3 392.0 457.8
Operating income 90.8 96.3 85.0 103.3
Interest income 0.6 0.7 0.8 0.5
Interest expense (9.9 ) (10.7 ) (10.4 ) (10.9 )
Income before taxes 81.5 86.3 75.4 92.9
Income tax expense 31.4 33.3 29.4 35.9
Net income $50.1 $53.0 $46.0 $57.0
Basic $0.40 $0.42 $0.38 $0.52
Diluted $0.39 $0.41 $0.37 $0.51
Shares used in computing net income per share:
Basic 125.7 125.8 121.0 109.8
Diluted 127.9 128.2 123.1 111.9
68
Three Months Ended
(In millions, except per share amounts) Mar. 31 Jun. 30 Sep. 30 Dec. 31
Year ended December 31, 2009:
Net sales and operating revenues $1,002.1 $965.7 $990.0 $1,318.2
Cost of products sold 534.5 520.9 518.9 739.2
Gross profit 467.6 444.8 471.1 579.0
SG&A expense 365.8 335.7 380.7 425.7
Depreciation and amortization 21.5 21.1 20.5 20.6
Impairment of longlived assets 0.2 0.3 0.5 0.5
Total operating expenses 387.5 357.1 401.7 446.8
Operating income 80.1 87.7 69.4 132.2
Interest income 1.5 1.5 0.9 0.9
Interest expense (11.5 ) (11.1 ) (11.2 ) (10.3 )
Other loss (1.6 )
Income before taxes 70.1 78.1 57.5 122.8
Income tax expense 27.0 29.3 20.1 47.1
Net income $43.1 $48.8 $37.4 $75.7
Basic and diluted $0.34 $0.39 $0.30 $0.60
Shares used in computing income per share:
Basic 125.4 125.4 125.5 125.5
Diluted 125.4 125.8 126.3 127.1
The sum of the quarterly net income per share amounts may not total to each full year amount because these computations are made
independently for each quarter and for the full year and take into account the weighted average number of common stock equivalent
shares outstanding for each period, including the effect of dilutive securities for that period.
69
INDEX TO EXHIBITS
Exhibit
Number Description
3.1 Certificate of Amendment of Restated
Certificate of Incorporation of RadioShack
Corporation(1) dated May 18, 2000 (filed as
Exhibit 3a to RadioShacks Form 10Q filed
on August 11, 2000, and incorporated herein
by reference).
3.2 Restated Certificate of Incorporation of
RadioShack Corporation(1) dated July 26,
1999 (filed as Exhibit 3a(i) to RadioShacks
Form 10Q filed on August 11, 1999, and
incorporated herein by reference).
3.3 Certificate of Elimination of Series C
Conversion Preferred Stock of RadioShack
Corporation(1) dated July 26, 1999 (filed as
Exhibit 3a(ii) to RadioShacks Form 10Q
filed on August 11, 1999, and incorporated
herein by reference).
3.4 Amended Certificate of Designations,
Preferences and Rights of Series A Junior
Participating Preferred Stock of RadioShack
Corporation(1) dated July 26, 1999 (filed as
Exhibit 3a(iii) to RadioShacks Form 10Q
3.5 Certificate of Designations of Series B
TESOP Convertible Preferred Stock dated
June 29, 1990 (filed as Exhibit 4A to
RadioShack's Form S8 for the RadioShack
Corporation Incentive Stock Plan, Reg. No.
3351603, filed on November 12, 1993, and
3.6 RadioShack Corporation Bylaws, amended
and restated as of November 4, 2010 (filed as
Exhibit 3.1 to RadioShacks Form 8K filed
on November 10, 2010, and incorporated
4.1 Indenture, dated as of May 11, 2001, between
RadioShack Corporation, as Issuer, and The
Bank of New York, as Trustee (filed as
Exhibit 4.1 to RadioShacks Form S4 filed
on June 8, 2001, and incorporated herein by
reference).
4.2 Form of New Note due 2011 (filed as Exhibit
4.2 to RadioShacks Form S4 filed on June
8, 2001, and incorporated herein by
reference).
4.3 Indenture, dated as of August 18, 2008,
between RadioShack Corporation and The
Bank of New York Mellon Trust Company,
N.A., as trustee (filed as Exhibit 4.1 to
RadioShack's Form 8K filed on August 18,
2008, and incorporated herein by reference).
4.4 Form of the 2.50% Convertible Senior Notes
due 2013 (included as Exhibit A to the
Indenture filed as Exhibit 4.1 to
RadioShack's Form 8K filed on August 18,
4.5 Master Terms and Conditions for Warrants
Issued by RadioShack Corporation, dated
August 12, 2008, between Citibank, N.A. and
RadioShack Corporation (filed as Exhibit
10.5 to RadioShacks Form 8K filed on
August 18, 2008, and incorporated herein by
reference).
4.6 Master Terms and Conditions for Warrants
Issued by RadioShack Corporation, dated
August 12, 2008, between Bank of America,
N.A. and RadioShack Corporation (filed as
Exhibit 10.6 to RadioShacks Form 8K
4.7 Confirmation for Warrants, dated August 12,
2008, between Citibank, N.A. and
reference).
4.8 Confirmation for Warrants, dated August 12,
2008, between Bank of America, N.A. and
reference).
10.1 Master Terms and Conditions for Convertible
Bond Hedging Transactions, dated August
12, 2008, between Citibank, N.A. and
reference).
10.2 Master Terms and Conditions for Convertible
Bond Hedging Transactions, dated August
12, 2008, between Bank of America, N.A.
and RadioShack Corporation (filed as Exhibit
reference).
10.3 Confirmation for Convertible Bond Hedging
Transactions, dated August 12, 2008,
between Citibank, N.A. and RadioShack
Corporation (filed as Exhibit 10.3 to
RadioShacks Form 8K filed on August 18,
10.4 Confirmation for Convertible Bond Hedging
Transactions, dated August 12, 2008,
between Bank of America, N.A. and
reference).
70
Exhibit
Number Description
10.5 Five Year Credit Agreement, dated as of June
12, 2006, among RadioShack Corporation,
the Initial Lenders named therein, Citibank,
N.A., as Administrative Agent and Paying
Agent, Bank of America, N.A., as
Administrative Agent and Initial Issuing
Bank, Wachovia Bank, National Association,
as CoSyndication Agent and Initial Issuing
Bank, Wells Fargo Bank, N.A., as
CoSyndication Agent, Citigroup Global
Markets Inc. and Banc of America Securities
LLC, as Joint Lead Arrangers and
Bookrunners (filed as Exhibit 10.1 to
RadioShacks Form 8K filed on June 16,
10.6 Credit Agreement, dated as of January 4,
2011, among RadioShack Corporation, the
Facility Guarantors party thereto, the Lenders
party thereto, and Bank of America, N.A., as
Administrative Agent and Collateral Agent
for itself and the other Lenders (filed as
filed on January 7, 2011, and incorporated
10.7 Security Agreement, dated as of January 4,
2011, among RadioShack Corporation, the
Facility Guarantors party thereto, and Bank
of America, N.A., as Administrative Agent
for the Secured Parties (filed as Exhibit 10.2
to RadioShacks Form 8K filed on January
reference).
10.8 Guaranty Agreement, dated as of January 4,
2011, among the Facility Guarantors party
thereto, for the benefit of Bank of America,
N.A., as Administrative Agent for itself and
the other Secured Parties (filed as Exhibit
January 7, 2011, and incorporated herein by
reference).
10.9 Overnight Share Repurchase Agreement,
dated as of August 5, 2005, between
RadioShack Corporation and Bank of
America, N.A. (filed as Exhibit 10.1 to
RadioShacks Form 8K filed on August 8,
10.10 (5) Confirmation for Accelerated Share
Repurchase Transaction, dated as of August
23, 2010, by and between Bank of America,
N.A. and RadioShack Corporation (filed as
Exhibit 10.1 to RadioShacks Form 10Q
filed on October 25, 2010, and incorporated
10.11 (5) Confirmation for Accelerated Share
Repurchase Transaction, dated as of August
23, 2010, by and among Wells Fargo
Securities, LLC, Wells Fargo Bank, N.A. and
10.2 to RadioShacks Form 10Q filed on
October 25, 2010, and incorporated herein by
reference).
10.12 Purchase and Sale Agreement, dated as of
June 25, 2008, between RadioShack
Corporation and Tarrant County College
District (filed as Exhibit 10.1 to
RadioShacks Form 8K filed on June 25,
10.13 Amended and Restated Lease, dated as of
June 25, 2008, between Tarrant County
College District as Landlord, and
RadioShack Corporation, as Tenant (filed as
filed on June 25, 2008, and incorporated
10.14 First Amendment to Lease, effective as of
March 11, 2010, by and between Tarrant
County College District as Landlord, and
RadioShack Corporation as Tenant (filed as
filed on March 18, 2010, and incorporated
10.15 Second Amendment to Lease, dated for all
purposes as of July 12, 2010, by and between
Tarrant County College District as Landlord,
and RadioShack Corporation as Tenant (filed
as Exhibit 10.1 to RadioShacks Form 8K
filed on July 12, 2010, and incorporated
10.16 Stock Purchase Agreement, made as
of December 15, 2008, by and among Tandy
International Corporation, ITC Services, Inc.,
and Grupo Gigante, S.A.B. de C.V. (filed as
filed on December 16, 2008, and
10.17 (2) RadioShack Corporation(1) Officers
Deferred Compensation Plan as restated July
10, 1992 (filed as Exhibit 10d to
RadioShacks Form 10K filed on March
reference).
10.18 (2) Second Amended and Restated RadioShack
Corporation Officers Deferred Compensation
Plan, effective as of December 31, 2008
(filed as Exhibit 10.54 to RadioShacks
Form 10K filed on February 24, 2009, and
10.19 (2) RadioShack Corporation 1993 Incentive
Stock Plan as amended (filed as Exhibit 10a
to RadioShack's Form 10Q filed on
November 14, 2001, and incorporated herein
by reference).
10.20 (2) Salary Continuation Plan for Executive
Employees of RadioShack Corporation(1)
and Subsidiaries (Restated) (filed as Exhibit
10a to RadioShacks Form 10K filed on
March 30, 1994, and incorporated herein by
reference).
10.21(2) Second Amended and Restated Salary
Continuation Plan for Executive Employees
of RadioShack Corporation and Subsidiaries,
effective as of December 31, 2008 (filed as
filed on February 24, 2009, and incorporated
10.22 (2) Forms of Termination Protection Agreements
for (i) Corporate Executives, (ii) Division
Executives, and (iii) Subsidiary Executives
(filed as Exhibit 10m to RadioShack's (1)
Form 10Q filed on August 11, 1995, and
71
Exhibit
Number Description
10.23 (2)
(3)
Second Amended and Restated Termination
Protection Agreement for Corporate
Executives, by and between RadioShack
Corporation and James F. Gooch, effective as
of December 31, 2010.
10.24 (2) Amended and Restated RadioShack
Corporation 1997 Incentive Stock Plan (filed
filed on May 24, 2005, and incorporated
10.25 (2) Form of Restricted Stock Agreement under
RadioShack Corporation 1997 Incentive
Stock Plan (filed as Exhibit 10a to
RadioShacks Form 10Q filed on May 6,
10.26 (2) Form of September 30, 1997 Deferred
Compensation Agreement (filed as Exhibit
10aa to RadioShack's(1) Form 10Q filed on
May 13, 1998, and incorporated herein by
reference).
10.28 (2) RadioShack Corporation Unfunded Deferred
Compensation Plan for Directors as amended
and restated July 22, 2000 (filed as Exhibit
10x to RadioShacks Form 10K filed on
reference).
10.29 (2) Second Amended and Restated RadioShack
Corporation Unfunded Deferred
Compensation Plan for Directors, effective as
of December 31, 2008 (filed as Exhibit 10.57
to RadioShacks Form 10K filed on
February 24, 2009, and incorporated herein
by reference).
10.31 (2) Death Benefit Agreement effective
December 27, 2001, among Leonard H.
Roberts, Laurie Roberts and RadioShack
Corporation (filed as Exhibit 10(a) to
RadioShacks Form 10Q filed on May 13,
10.32 (2) RadioShack 2004 Annual and LongTerm
Incentive Compensation Plan (the written
description of which is contained on pages 26
through 29 of RadioShack's Proxy Statement
filed on April 8, 2004, for the 2004 Annual
Meeting of Stockholders, and incorporated
10.33 (2) Amendment to RadioShack 2004 Annual and
LongTerm Incentive Compensation Plan
(the written description of which is contained
on pages 32 and 33 of RadioShack's Proxy
Statement filed on April 12, 2007, and
10.34 (2) Third Amended and Restated
RadioShack 2004 Deferred Stock Unit Plan
for NonEmployee Directors, effective as of
December 31, 2008 (filed as Exhibit 10.58 to
RadioShacks Form 10K filed on February
reference).
10.35 (2) Form of Notice of Grant of Deferred Stock
Units and Deferred Stock Unit Agreement
under the RadioShack 2004 Deferred Stock
Unit Plan for NonEmployee Directors (filed
10.36 (2) Form of Incentive Stock Plan(s) Stock
Option Agreement for Officers (filed as
Exhibit 10(a) to RadioShacks Form 10Q
filed on November 5, 2004, and incorporated
10.37 (2) RadioShack Corporation LongTerm
Incentive Plan (filed as Exhibit 10.4 to
reference).
10.38 (2) Form of Indemnification Agreement (filed as
10.39 (2) RadioShack Corporation Officers
Supplemental Executive Retirement Plan
(filed as Exhibit 10.52 to RadioShacks
Form 10K filed on March 15, 2006, and
10.40 (2) Form of RadioShack Corporation Officers
Agreement (filed as Exhibit 10.53 to
RadioShacks Form 10K filed on March
reference).
10.41 (2) Form of RadioShack Corporation Officers
Agreement for Existing Participants in the
Salary Continuation Plan (filed as Exhibit
reference).
10.42 (2) First Amended and Restated RadioShack
Corporation Officers Supplemental
Executive Retirement Plan (filed as Exhibit
by reference).
10.43
(2) (3)
Second Amended and Restated RadioShack
Corporation Officers Supplemental
Executive Retirement Plan, effective as of
December 31, 2010.
10.44
(2)
RadioShack Corporation Officers
Severance Program (filed as Exhibit 10.3 to
RadioShacks Form 8K filed on May 23,
10.45
(2)
First Amended and Restated RadioShack
Corporation Officers' Severance Program,
effective as of December 31, 2008 (filed as
filed on February 24, 2009, and incorporated
72
Exhibit
Number Description
10.46 (2)
(3)
Second Amended and Restated RadioShack
Corporation OfficersSeverance Program,
effective as of December 31, 2010.
10.47 (2) Letter Agreement, dated July 6, 2006,
between RadioShack Corporation and Julian
C. Day (filed as Exhibit 10.1 to
RadioShacks Form 8K filed on July 7,
10.48 (2) Incentive Stock Plan NonQualified Stock
Option Agreement under the 1997 Incentive
Stock Plan, dated July 6, 2006, between
RadioShack Corporation and Julian C. Day
(filed as Exhibit 10.2 to RadioShacks Form
8K filed on July 7, 2006, and incorporated
Option Agreement, dated July 6, 2006,
Option Agreement, dated July 6, 2006,
10.53 (2) Agreement on Nonsolicitation,
Confidentiality, Noncompetition and
Intellectual Property, dated July 6, 2006,
10.54 (2) Employment Offer Letter to James F. Gooch
from RadioShack Corporation, dated July 27,
2006 (filed as Exhibit 10.8 to RadioShacks
Form 10Q filed on October 25, 2006, and
10.55 (2)
(3)
Agreement, dated January 21, 2011, between
RadioShack Corporation and James F.
Gooch.
10.56 (2) Description of LongTerm Incentive
Performance Measures for the 2008 through
2010 Performance Cycle (filed as Exhibit
by reference).
10.57 (2) RadioShack Corporation 2007 Restricted
Stock Plan (included as Appendix A to
RadioShack's Proxy Statement filed on April
reference).
the RadioShack Corporation 2007 Restricted
Stock Plan (filed as Exhibit 10.2 to
RadioShack's Form 8K filed on May 18,
10.59 (2) Employment Offer Letter to Bryan Bevin
from RadioShack Corporation, dated
December 11, 2007, as modified effective
September 11, 2008 (filed as Exhibit 10.67 to
26, 2008, and Item 5.02 of RadioShacks
Form 8K filed on September 17, 2008, and
10.60 (2) Employment Offer Letter to Lee D.
Applbaum from RadioShack Corporation,
dated August 13, 2008 (filed as Exhibit 10.54
by reference).
10.61 (2)
(3)
Employment Offer Letter to Sharon S.
Stufflebeme from RadioShack Corporation,
dated May 20, 2009.
10.62 (2) Employment Offer Letter to Scott E. Young
from RadioShack Corporation, dated March
18, 2010 (filed as Exhibit 99.2 to
RadioShacks Form 8K filed on April 6,
10.63 (2)
(3)
Employment Offer Letter to Mary Ann
Doran from RadioShack Corporation, dated
May 28, 2010.
10.64 (2)
(3)
Third Amended and Restated RadioShack
Corporation Termination Protection Plan
(Level I), effective as of December 31, 2010.
10.65 (2) 2009 RadioShack Corporation Annual &
LongTerm Incentive Compensation Plan
(included as Appendix A to RadioShacks
Proxy Statement filed on April 17, 2009, and
10.66 (2) RadioShack Corporation 2009 Incentive
Stock Plan (included as Appendix B to
RadioShack's Proxy Statement filed on April
reference).
10.67 (2) Form of Stock Option Agreement under the
RadioShack Corporation 2009 Incentive
RadioShack's Form 10Q filed on July 27,
the RadioShack Corporation 2009 Incentive
22, 2010 and incorporated herein by
reference).
73
Exhibit
Number Description
10.69 (2) Form of Restricted Stock Unit Agreement
under the RadioShack Corporation 2009
Incentive Stock Plan (filed as Exhibit 10.60
February 22, 2010 and incorporated herein
by reference).
10.70 (2)
(3)
RadioShack Corporation 2011 Executive
Deferred Compensation Plan, effective as of
December 1, 2010.
21 (3) RadioShack Significant Subsidiaries.
23 (3) Consent of PricewaterhouseCoopers LLP.
31(a) (3) Rule 13a14(a) Certification of the Chief
Executive Officer of RadioShack
Corporation.
31(b) (3) Rule 13a14(a) Certification of the Chief
Financial Officer of RadioShack
Corporation.
32 (3) Section 1350 Certifications.(4)
(1) RadioShack Corporation was known as Tandy
Corporation until May 18, 2000.
(2) Management contract or compensatory plan or
arrangement required to be filed as an exhibit
pursuant to Item 15(b) of Form 10K.
(3) Filed with this report.
(4) These certifications shall not be deemed filed
for purposes of Section 18 of the Exchange Act or
otherwise subject to the liability of that section.
These certifications shall not be deemed to be
incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the
Company specifically incorporates them by
reference.
(5) Portions of this exhibit have been redacted and
have been filed separately with the SEC pursuant
to a request for confidential treatment.
74
Exhibit 10.23
SECOND AMENDED AND RESTATED
TERMINATION PROTECTION AGREEMENT
FOR CORPORATE EXECUTIVES
THIS SECOND AMENDED AND RESTATED AGREEMENT (the Agreement) effective as of the 31st day of December, 2010 (the
Effective Date), by and between the "Company" (as hereinafter defined) and James F. Gooch (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a "Change in Control" (as hereinafter
defined) exists and that the threat or the occurrence of a Change in Control can result in significant distractions of its key management
personnel because of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services
of the Executive in the event of a threat or occurrence of a Change in Control and to ensure his continued dedication and efforts in such
event without undue concern for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the
occurrence of a Change in Control, the Company has previously entered into an amended and restated agreement with the Executive,
effective as of December 31, 2008, to provide the Executive with certain benefits in the event his employment is terminated as a result of,
or in connection with, a Change in Control and to provide the Executive with the "GrossUp Payment" (as hereinafter defined) and certain
other benefits whether or not the Executive's employment is terminated (the Prior Agreement);
WHEREAS, the Company and the Executive now find it desirable and necessary to enter into this Agreement, which amends and restates
the provisions of the Prior Agreement;
NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the Effective Date and shall continue in effect until May 18, 2011;
provided, however, that commencing on May 18, 2011 and on each May 18 thereafter, the term of this Agreement shall be automatically
extended for one (1) year unless either the Company or the Executive shall have given written notice to the other at least ninety (90) days
prior thereto that the term of this Agreement shall not be so extended; and provided, further, however, that notwithstanding any such
notice by the Company not to extend, the term of this Agreement shall not expire prior to the expiration of twentyfour (24) months after
the occurrence of a Change in Control.
2. Definitions.
2.1. Accrued Compensation. For purposes of this Agreement, Accrued Compensationshall mean an amount which shall include
all amounts earned or accrued through the Termination Date (as hereinafter defined) but not paid as of the Termination Date, including (i)
base salary, (ii) reimbursement for reasonable and necessary expenses incurred by the Executive (as hereinafter defined) on behalf of the
Company during the period ending on the Termination Date in accordance with the Companys business expense reimbursement policies,
(iii) vacation pay as required by law, and (iv) bonuses and incentive compensation, other than the Pro Rata Bonus (as hereinafter defined);
provided that the Agreement shall in no event be deemed to modify, alter or amend the terms of any plan, policy, practice or program of,
or any contract or agreement with, the Company or any Subsidiary applicable to the time and form of payment of any such amounts, and
all amounts shall be payable in accordance with the
1
terms of such plan, policy, practice or program under which the amounts have accrued.
2.2. Base Amount. For purposes of this Agreement, "Base Amount" shall mean the greater of the Executive's annual base salary (a)
at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the
Change in Control, and shall include all amounts of his base salary that are deferred under the qualified and nonqualified employee
benefit plans of the Company.
2.3. Bonus Amount. For purposes of this Agreement, "Bonus Amount" shall mean the highest annual bonus paid or payable to the
Executive for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control.
2.4. Cause. For purposes of this Agreement, a termination of employment is for "Cause" if the Executive has been convicted of a
felony or the termination is evidenced by a resolution adopted in good faith by twothirds of the Board that the Executive (a) intentionally
and continually failed substantially to perform his reasonably assigned duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness or from the Executive's assignment of duties that would constitute "Good Reason"
as hereinafter defined) which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial
performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b)
intentionally engaged in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; provided,
however, that no termination of the Executive's employment shall be for Cause as set forth in clause (b) above until (x) there shall have
been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (b)
and specifying the particulars thereof in detail, and (y) the Executive shall have been provided an opportunity to be heard in person by the
Board (with the assistance of the Executive's counsel if the Executive so desires). No act, nor failure to act, on the Executive's part, shall
be considered "intentional" unless the Executive has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief
that the Executive's action or failure to act was in the best interest of the Company.
2.5. Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the Voting Securities) by any
Person(as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
934 Act)) immediately after which such Person has Beneficial Ownership(within the meaning of Rule 13d3 promulgated under
the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Companys then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a NonControl
Acquisition (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control.
A NonControl Acquisitionshall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Company (for purposes of this definition, a Subsidiary), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a NonControl Transaction (as hereinafter defined);
(b) The individuals who, as of the Effective Date, are members of the Board (the Incumbent Board), cease for any reason to
constitute at least twothirds of the Board; provided, however, that if the election, or nomination for election by the Companys
stockholders, of any new
2
director was approved by a vote of at least twothirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of either an actual or threatened Election Contest(as described
in Rule 14a11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a Proxy Contest) including by reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation, reorganization or other business combination with or into the Company or in which securities of the
Company are issued, unless
(A) the stockholders of the Company, immediately before such merger, consolidation, reorganization or other business combination, own
directly or indirectly immediately following such merger, consolidation, reorganization or other business combination, at least sixty
percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or
consolidation, reorganization or other business combination (the Surviving Corporation) in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger, consolidation, reorganization or other business combination,
(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such
merger, consolidation, reorganization or other business combination constitute at least twothirds of the members of the board of directors
of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the combined voting power of the
outstanding voting securities of the Surviving Corporation, or
(C) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that,
immediately prior to such merger, consolidation, reorganization or other business combination was maintained by the Company, the
Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation, reorganization or
other business combination had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities, has
Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporations then outstanding
voting securities, and
A transaction described in clauses (A) through (C) shall herein be referred to as a NonControl Transaction.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than (i) any such sale or
disposition that results in at least fifty percent (50%) of the Companys assets being owned by one or more subsidiaries or (ii) a
distribution to the Companys stockholders of the stock of a subsidiary or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the Subject Person)
acquired Beneficial Ownership of more than the permitted amount of the then outstanding Voting Securities (X) as a result of the
acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the
operation of this subsection (X)) as a result of the acquisition of Voting
3
Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any
additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur, or (Y) and such Subject Person (1) within fourteen (14) Business Days (or such greater
period of time as may be determined by action of the Board) after such Subject Person would otherwise have caused a Change in Control
(but for the operation of this clause (Y)), such Subject Person notifies the Board that such Subject Person did so inadvertently, and (2)
within seven (7) Business Days after such notification (or such greater period of time as may be determined by action of the Board), such
Subject Person divests itself of a sufficient number of Voting Securities so that such Subject Person is no longer the Beneficial Owner of
more than the permitted amount of the outstanding Voting Securities.
(d) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated during the
term of this Agreement but within one (1) year prior to a Change in Control and the Executive reasonably demonstrates that such
termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in
Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination of the Executive's employment (such a termination, an
Anticipatory Termination).
2.6 Company. For purposes of this Agreement, the Companyshall mean RadioShack Corporation and shall include its Successors
and Assigns(as hereafter defined).
2.7. Disability. For purposes of this Agreement, "Disability" shall mean a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with the Company for a period of one hundred eighty (180) consecutive days and the Executive
has not returned to his full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter
defined).
2.8. (a) Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence after a Change in Control of any
of the events or conditions described in Subsections (i) through (ix) hereof:
(i) a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, represents an adverse change in his status, title, position or responsibilities as in effect at any time within
ninety (90) days preceding the date of the Change in Control or at any time thereafter; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment, are inconsistent with such status, title, position or responsibilities as in
effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; or any removal of the
Executive from or failure to reappoint or reelect him to any of his offices or positions, except in connection with the termination of the
Executive's employment for Cause, or as a result of his death, or by the Executive other than for Good Reason;
(ii) a reduction in the rate of the Executive's base salary below the Base Amount or any failure to pay the Executive any
compensation or benefits to which he is entitled within fifteen (15) days of the date notice of such failure to pay is given to the Company
and, in the case of any annual bonus, within fortyfive (45) days following the end of the fiscal year pursuant to which such bonus
relates;
4
(iii) a change in the accounting policies or practices as in effect during the ninety (90) days preceding the Change in Control or at
any time thereafter which, in the Executive's reasonable judgment, results in a reduction in his earning potential;
(iv) the Company's requiring the Executive to be based at any place outside a 20mile radius from his place of employment on the
day prior to the Change in Control, except for reasonably required travel on the Company's business which is not materially greater than
such travel requirements prior to the Change in Control;
(v) the failure by the Company to (A) continue in effect (without reduction in benefit levels, reward opportunities and/or bonus
potential for comparable performance) any material compensation or benefit plan in which the Executive was participating at any time
within ninety (90) days preceding the Change in Control or at any time thereafter including, but not limited to, the plans listed on
Appendix A, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Executive, or
(B) provide the Executive with compensation and benefits, in the aggregate at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee benefit plan, program and practice in which the Executive was
participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter;
(vi) the insolvency or the filing (by any party, including the Company) of a petition for bankruptcy, of the Company, which petition
is not dismissed within sixty (60) days;
(vii) any material breach by the Company of any provision hereof;
(viii) any purported termination of the Executive's employment for Cause by the Company which does not comply with the terms of
Section 2.4 hereof; and
(ix) the failure of the Company to obtain an agreement, satisfactory to the Executive, from any Successor or Assign of the
Company, to assume and agree to perform this Agreement, as contemplated in Section 6 hereof.
(b) Any event or condition described in this Section 2.8(a)(i) through (ix) which occurs during the term of this Agreement but
within one (1) year prior to a Change in Control and which the Executive reasonably demonstrates (i) was at the request of a Third Party
or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason
for purposes of this Agreement notwithstanding that it occurred prior to the Change in Control.
2.9. Notice of Termination. For purposes of this Agreement, following a Change in Control, "Notice of Termination" shall mean a
written notice of termination from the Company of the Executive's employment which indicates the specific termination provision in this
Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
2.10. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator
of which is 365.
2.11. Successors and Assigns. For purposes of this Agreement, "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business
5
of the Company (including this Agreement) whether by operation of law or otherwise.
2.12. Termination Date. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, his
date of death, in the case of Good Reason, the last day of his employment, and in all other cases, the date specified in the Notice of
Termination; provided, however, that if the Executive's employment is terminated by the Company for Cause or due to Disability, the date
specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive,
provided that in the case of Disability the Executive shall not have returned to the fulltime performance of his duties during such period
of at least 30 days. The Company shall take all steps necessary (including with respect to any posttermination services by the Executive)
to ensure that any termination described in this Agreement constitutes a separation from service,within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended (the Code) (unless otherwise indicated, all sectionor Codereferences are to
the Code and the Treasury Regulations related thereto, as may be amended from time to time, promulgated under the authority of the
applicable Code section and, in each case, any successor provisions thereto) (a Separation from Service), and notwithstanding anything
contained herein to the contrary, the date on which such Separation from Service occurs shall be the Termination Date.
3. Termination of Employment.
3.1. If, during the term of this Agreement, the Executive's employment with the Company shall be terminated within twentyfour
(24) months following a Change in Control, the Executive shall be entitled to the following compensation and benefits:
(a) If the Executive's employment with the Company shall be terminated (1) by reason of the Executive's death, (2) by the Company
for Cause or Disability, or (3) by the Executive other than for Good Reason and other than during the 60day period commencing on the
first anniversary of the date of the occurrence of a Change in Control (the "Window Period"), the Company shall pay to the Executive the
Accrued Compensation and, if such termination is other than by the Company for Cause, a Pro Rata Bonus.
(b) If the Executive's employment with the Company shall be terminated for any reason other than as specified in Section 3.1(a) or
during the Window Period, the Executive shall be entitled to the following:
(i) the Company shall pay the Executive all Accrued Compensation and a Pro Rata Bonus;
(ii) the Company shall pay the Executive as termination pay and in lieu of any further compensation for periods subsequent to the
Termination Date, in a single payment an amount (the "Termination Amount") in cash equal to two times the sum of (A) the Base Amount
and (B) the Bonus Amount;
(iii) for twentyfour (24) months from the Termination Date (the "Continuation Period"), the Company shall at its expense continue on
behalf of the Executive and his dependents and beneficiaries the fringe benefits, (excluding those benefit plans numbered 1 through 5
inclusive on Appendix A but including an automobile or automobile allowance and the related expenses of public liability insurance,
collision coverage, repairs and maintenance) and the life insurance, disability, medical, dental and hospitalization benefits provided (x) to
the Executive at any time during the 90day period prior to the Change in Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the Company during the Continuation Period; provided, however, that with
6
respect to any Executive who was entitled to the use of an automobile provided by the Company within the ninety (90) day period prior to
a Change in Control or at any time thereafter, the Executive shall be paid a cash payment equal to the value of the Company provided
automobile to the Executive for the Continuation Period; and provided further, however, that the Companys obligation to provide
continuation of any benefits which the Executive may obtain through the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA) will instead be satisfied, in lieu of such continuation, by a single lump sum cash payment equal to the COBRA
Amount, regardless of whether of whether the Executive maintains COBRA coverage. For purposes of this Agreement, the COBRA
Amountmeans the product of (A) 24 multiplied by (B) the monthly premium under the Companys health and welfare plans then in
effect for coverage obtained thereunder pursuant to COBRA. The coverage and benefits (including deductibles and contributions by the
Executive, if any) provided in this Section 3.1(b)(iii) during the Continuation Period shall be no less favorable to the Executive and his
dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x)
and (y) above. The Company's obligation hereunder with respect to the foregoing benefits (except for any benefits which the Executive
may obtain through COBRA, and the automobile or automobile allowance and the related expenses of public liability insurance, collision
coverage, repairs and maintenance) shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive
hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the
coverages and benefits required to be provided hereunder. This Subsection (iii) shall not be interpreted so as to limit any benefits to which
the Executive, his dependents or beneficiaries may be entitled under any of the Company's employee benefit plans, programs or practices
following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits.
(iv) the Company shall pay in a single payment an amount equal to eighty percent (80%) of the maximum amount the Executive
could have contributed under the RadioShack 401(k) Plan, as in effect on the date immediately prior to the Change in Control during the
Continuation Period had the Executive continued in the employment with the Company during the Continuation Period at the greater of
his annualized gross salary and wages as in effect immediately prior to the Change in Control or at any time thereafter; and
(v) (A) on the Executives Termination Date, the restrictions on any outstanding incentive awards (including restricted stock and
granted performance shares or units) granted to the Executive including, but not limited to, awards granted under the Company's 1985
Stock Option Plan, 1993 Incentive Stock Plan, 1997 Incentive Stock Plan, 1999 Incentive Stock Plan, 2001 Incentive Stock Plan, 2009
Incentive Stock Plan or under any other incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, all
stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested,
and all performance units granted to the Executive shall become 100% vested, and (B) the Executive shall have the right to require the
Company to purchase, for cash, any shares of unrestricted stock or shares purchased upon exercise of any options, at a price equal to the
fair market value of such shares on the date of purchase by the Company.
(c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i) (other than Accrued Compensation), (ii), (iii) (only as to the COBRA
Amount and the automobile allowance (and the related expenses of public liability insurance, collision coverage, repairs and
maintenance)) and (iv) shall be paid in a single lump sum cash payment on the 60th day following the Executive's Termination
Date. Executives Accrued Compensation shall be paid to Executive on the 30th day following the Termination Date; provided that
Accrued Compensation attributable to a plan, policy, practice, program, contract or agreement shall be paid in accordance with the terms
thereof under which the amounts have accrued.
7
(d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as provided in Section 3.1(b)(iii).
3.2. (a) Except as would otherwise result in a violation of Code section 409A, the termination pay and termination benefits
provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive may be entitled under any
Company severance or termination plan, program, policy or practice.
(b) The Executive's entitlement to any other compensation or benefits (other than a Pro Rata Bonus and other than the termination
pay and termination benefits as provided under this Section 3) shall be determined in accordance with the Company's employee benefit
plans (including, the plans listed on Appendix A) and other applicable programs, policies and practices then in effect.
4. Notice of Termination. Following a Change in Control, any purported termination of the Executive's employment by the
Company shall be communicated by Notice of Termination to the Executive. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.
5. Excise Tax Payments.
(a) In the event that any payment or benefit (within the meaning of Code section 280G(b)(2)), to the Executive or for his benefit
paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of,
his employment with the Company or a change in ownership or effective control of the Company or of a substantial portion of its assets
(a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "GrossUp Payment")
in an amount such that after payment by the Executive of all taxes (including any interest or penalties, other than interest and penalties
imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on his return, imposed with respect to such
taxes and the Excise Tax), including any Excise Tax imposed upon the GrossUp Payment, the Executive retains an amount of the
GrossUp Payment equal to the Excise Tax imposed upon the Payments.
(b) An initial determination as to whether a GrossUp Payment is required pursuant to this Agreement and the amount of such
GrossUp Payment shall be made at the Company's expense by an accounting firm selected by the Company and reasonably acceptable to
the Executive which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation
to the Company and the Executive within five days of the Termination Date if applicable, or such other time as requested by the Company
or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the
Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or
Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the
Determination (the "Dispute"). The GrossUp Payment, if any, as determined pursuant to this Paragraph
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5(b) shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. The existence
of the Dispute shall not in any way affect the Executive's right to receive the GrossUp Payment in accordance with the Determination. If
there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the
application of Paragraph 5(c) below.
(c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that a GrossUp
Payment (or a portion thereof) will be paid which should not have been paid (an "Excess Payment") or a GrossUp Payment (or a portion
thereof) which should have been paid will not have been paid (an "Underpayment"). An Underpayment shall be deemed to have occurred
(i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive's tax liability (whether in
respect of the Executive's current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the
Excise Tax on a Payment or Payments with respect to which the Company has failed to make a sufficient GrossUp Payment, (ii) upon a
determination by a court, (iii) by reason of determination by the Company (which shall include the position taken by the Company,
together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive's
satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Company and the Company shall promptly, but in any
event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive
an additional GrossUp Payment equal to the amount of the Underpayment plus any interest and penalties (other than interest and
penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on the Executive's return) imposed
on the Underpayment. An Excess Payment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that
the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously
received a GrossUp Payment. A "Final Determination" shall be deemed to have occurred when the Executive has received from the
applicable government taxing authority a refund of taxes or other reduction in the Executive's tax liability by reason of the Excise Payment
and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority
which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of
competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and
finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive's applicable tax return
has expired. If an Excess Payment is determined to have been made, the Executive shall pay to the Company on demand (but not less than
10 days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess
Payment plus interest at an annual rate equal to the Applicable Federal Rate provided for in Section 1274(d) of the Code from the date the
GrossUp Payment (to which the Excess Payment relates) was paid to the Executive until the date of repayment to the Company.
(d) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an
Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable government taxing authorities as
Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments.
(e) Any GrossUp Payment shall in all events be paid no later than the end of the Executives taxable year next following the
Executives taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are
remitted to the Internal Revenue Service or any other applicable taxing authority.
9
6. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its Successors and Assigns and the
Company shall require any Successor or Assign to expressly assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession or assignment had taken place.
(b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his beneficiaries
or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or
enforce any right or benefit provided by this Agreement (including, but not limited to, any such fees and expenses incurred in connection
with (i) the Dispute and (ii) the GrossUp Payment whether as a result of any applicable government taxing authority proceeding, audit or
otherwise) or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive
benefits, and (c) the Executive's hearing before the Board as contemplated in Section 2.4 of this Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) (other than as a result of an Anticipatory Termination) occurred on or after a Change in
Control.
8. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including
the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by a
nationally recognized overnight delivery service or by certified mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the sending thereof, except that notice of change of address shall be effective only upon receipt.
9. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation
in any benefit, bonus, incentive or other plan or program provided by the Company (except for any severance or termination policies,
plans, programs or practices) and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the
Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which
are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in
accordance with such plan or program, except as explicitly modified by this Agreement.
10. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim,
recoupment, defense or other right which the Company may have against the Executive or others.
11. Miscellaneous; Code Section 409A. No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto
at any time of any breach by the other
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party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
It is intended that this Agreement and the Companys exercise of authority or discretion hereunder shall comply with the provisions of
Code section 409A and the Treasury Regulations relating thereto so as not to subject Executive to the payment of interest and tax penalty
which may be imposed under Code section 409A. In furtherance of this interest, to the extent that any regulations or other guidance
issued under Code section 409A after the effective date of this Agreement would result in Executive being subject to payment of interest
and tax penalty under Code section 409A, the Company may amend the Agreement, with the Executives consent, including with respect
to the timing of payment of benefits, in order to avoid the application of or to comply with the requirements of Code section 409A;
provided, however, that the Company makes no representation that compensation or benefits payable under this Agreement shall be
exempt from or comply with Code section 409A and makes no representation to preclude Code section 409A from applying to the
compensation or benefits payable under the Agreement.
A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the
payment of any amounts or benefits payable under this Agreement that is nonqualified deferred compensation subject to Code section
409A (such amounts, together, the 09A Deferred Compensation Amounts), upon or following a termination of employment unless
such termination is also a Separation from Service.
With respect to any amount of expenses eligible for reimbursement or the provision of any inkind benefits under this Agreement, to the
extent such payment or benefit would be considered deferred compensation under Code section 409A or is required to be included in the
Executives gross income for federal income tax purposes, such expenses (including, without limitation, expenses associated with inkind
benefits) will be reimbursed by the Company no later than December 31st of the year following the year in which the Executive incurs the
related expenses. In no event shall the reimbursements or inkind benefits to be provided by the Company in one taxable year affect the
amount of reimbursements or inkind benefits to be provided in any other taxable year, nor will the Executives right to reimbursement
or inkind benefits be subject to liquidation or exchange for another benefit.
Each payment under this Agreement is intended to be a separate paymentand not of a series of payments for purposes of Code section
409A.
Notwithstanding any provisions of the Agreement to the contrary, if the Executive is a specified employee(within the meaning of Code
section 409A and determined pursuant to any policies adopted by the Company consistent with Code section 409A) (a Specified
Employee), at the time of the Executives Separation from Service and if any portion of the payments or benefits to be received by the
Executive upon Separation from Service would be considered deferred compensation under Code section 409A and cannot be paid or
provided to the Executive without the Executive incurring taxes, interest or penalties under Code section 409A, amounts that would
otherwise be payable pursuant to this Agreement and benefits that would otherwise be provided pursuant to this Agreement, in each case,
during the sixmonth period immediately following the Executives Separation from Service will instead be paid or made available on
the earlier of (i) the first business day of the seventh month following the date of the Executives Separation from Service or (ii) the
Executives death (such earlier date, the Delayed Payment Date).
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Anything in this Agreement to the contrary notwithstanding, in the event of an Anticipatory Termination, any 409A Deferred
Compensation Amounts shall be paid as follows: (i) if the Change in Control is a change in control event,within the meaning of Code
section 409A, (A) except as provided in clause (i)(B), on the date of such change in control event, or (B) if the Executive is a Specified
Employee, and the Delayed Payment Date is later than the date of such change in control event, on the Delayed Payment Date, and (ii) if
the Change in Control is not a change in control event," within the meaning of Code section 409A, on the first anniversary of the date of
such Anticipatory Termination to the extent payment on such date would not violate Code section 409A. In the event of an Anticipatory
Termination, any payments or benefits required to be paid or provided under this Agreement that are not deferred compensation subject to
Code section 409A shall be paid or shall commence being provided on the date of the Change in Control.
12. Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF;
PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING THE EXECUTIVE AND THE COMPANY WITH RESPECT TO
ANY CLAIM OR ASSERTION THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE
COMPANY HAS THE BURDEN OF PROVING THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED
FOR CAUSE.
13. Forum. Any suit brought by the Executive under this Agreement may be brought in the appropriate state or federal court for
Tarrant County, Texas, or for the county wherein the Executive maintains his residence. Any suit brought by the Company under this
Agreement may only be brought in the county wherein the Executive maintains his residence unless the Executive consents to suit
elsewhere.
14. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other provisions hereof.
15. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof,
including, without limitation, the Prior Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement effective as of the day and year first above written.
By: _/s/ Jeffrey J. Walker______________
Jeffrey J. Walker
Title: Assistant General Counsel & Assistant
Corporate Secretary
_/s/ James F. Gooch______________
Executive
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APPENDIX A
COMPENSATION AND BENEFIT PLANS
1. RadioShack 401(k) Plan, as amended
2. RadioShack Corporation 1997, 1999, 2001 and 2009 Incentive Stock Plans, as amended.
3. RadioShack Corporation 2007 Restricted Stock Plan, as amended.
4. Second Amended and Restated RadioShack Corporation Officers Supplemental Executive Retirement Plan, as amended.
5. Second Amended and Restated RadioShack Corporation OfficersSeverance Program, as amended.
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Exhibit 10.43
OFFICERS SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
RadioShack Corporation, a Delaware corporation ("RadioShack"), hereby amends and restates, effective as of December 31, 2010, the
First Amended and Restated RadioShack Corporation Officers Supplemental Executive Retirement Plan (as restated herein, the Plan)
in order to satisfy the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the Code). Unless otherwise
indicated, all sectionor Codereferences are to the Code and the Treasury Regulations related thereto, as may be amended from time
to time, promulgated under the authority of the applicable Code section and, in each case, any successor provisions thereto.
RadioShack intends that this Plan, as amended and restated, applies solely to compensation earned or vested on or after January 1, 2005,
including any earnings thereon, to the extent such compensation was not paid or distributed prior to December 31, 2010. Further, it is the
intent of the RadioShack that this Plan, as amended and restated, shall have no effect whatsoever on any benefits earned and vested on or
before December 31, 2004, including any earnings thereon, and the parties intend that such benefits remain exempt from Code section
409A.
ARTICLE ONE
PURPOSE
Section 1.1 The purpose of this Plan is to enable RadioShack Corporation and its subsidiaries to provide key executive
personnel certain death and retirement benefits.
ARTICLE TWO
DEFINITIONS
Section 2.1 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant in the Plan to whom
benefits are payable following his death.
Section 2.2 Benefit Service Year. The service that is used to determine a Participants Plan Benefit under this Plan. Each
Participant shall be granted onetwelfth of a year of Benefit Services Year for each full or partial calendar month of his employment with
RadioShack commencing on the date of his appointment as an officer of RadioShack and ending with the date termination of employment
with RadioShack or the cessation of service as an officer of RadioShack, whichever shall first occur. Determination of Benefit Service
Years shall be subject to the following:
(i) Separate years of Participants service with RadioShack as an officer shall be aggregated for purposes of determining Benefit Service
Years.
(ii) A Participants authorized Leave of Absence will not interrupt continuing of employment of a Participant as an officer for purposes
of the Plan.
Section 2.3 Benefit Service Years Credit. A Participants Benefit Service Years Credit shall be equal to 2.5% multiplied by
the Participants Benefit Service Years. In no event shall a Participants Benefit Service Years Credit exceed 50%.
Section 2.4 Change in Control. For purpose of the Plan, a Change in Controlshall mean any of the following events:
(a) An acquisition (other than directly from RadioShack (the Companyfor purposes of this definition)) of any voting securities of
the Company (the Voting Securities) by any Person(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the 934 Act)) immediately after which such Person has Beneficial Ownership
(within the meaning of Rule 13d3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of
the Companys then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a NonControl Acquisition (as hereinafter defined) shall not constitute an acquisition which would cause
a Change in Control.
1
(b) The individuals who, as of January 1, 2006, are members of the Board (the Incumbent Board), cease for any reason to
constitute at least twothirds of the Board; provided, however, that if the election, or nomination for election by the Companys
stockholders, of any new director was approved by a vote of at least twothirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened
Election Contest(as described in Rule 14a11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a Proxy Contest) including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(i) A merger, consolidation, reorganization or other business combination with or into the Company or in which securities of the
(A) the stockholders of the Company, immediately before such merger, consolidation, reorganization or other business combination, own
(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such
(C) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that,
other business combination had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities, has
Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporations then outstanding
voting securities, and
2
(iii) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than (i) any such sale
or disposition that results in at least fifty percent (50%) of the Companys assets being owned by one or more subsidiaries or (ii) a
operation of this subsection (X)) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur, or (Y) and such
Subject Person (1) within fourteen (14) Business Days (or such greater period of time as may be determined by action of the Board) after
such Subject Person would otherwise have caused a Change in Control (but for the operation of this clause (Y)), such Subject Person
notifies the Board that such Subject Person did so inadvertently, and (2) within seven (7) Business Days after such notification (or such
greater period of time as may be determined by action of the Board), such Subject Person divests itself of a sufficient number of Voting
Securities so that such Subject Person is no longer the Beneficial Owner of more than the permitted amount of the outstanding Voting
Securities.
Notwithstanding the foregoing, for purposes of Section 5.3 hereof, the second and third (but not the first) sentences in Section 8.5(a)
hereof, and for purposes of Sections 8.5(b) and 8.6 hereof, a Change in Control shall occur with respect to a Participant only upon the
occurrence of an event that both (a) constitutes a Change in Control under the above definition and (b) constitutes a change in control
event for purposes of Code section 409A.
Section 2.5 Committee. The Management Development and Compensation Committee (or any successor committee under
any different name) of the Board of Directors of RadioShack.
Section 2.6 Disability. A physical or mental condition which, in the sole opinion of the Committee, totally and permanently,
prevents a Participant from substantially performing duties for which such Participant is suited to perform either by education or training,
or if such Participant is on a Leave of Absence when such condition develops, substantially performing duties for which such Participant
is suited to perform either by education or training. A determination that Disability exists shall be based upon competent medical
evidence satisfactory to the Committee. The date that any persons Disability occurs shall be deemed to be the date such condition is
determined to exist by the Committee.
Section 2.7 Employee. A regular fulltime executive employee of RadioShack serving as either a RadioShack Corporate,
RadioShack Division or RadioShack subsidiary officer.
Section 2.8 Highest Average Plan Compensation. The average annual Plan Compensation earned by the Participant for the
five consecutive highestpaid Plan years while a Participant. This average shall be computed by dividing the total of the Participants
Plan Compensation for such five Plan Years by the number of years in such five Plan Years for which the Participant had Plan
Compensation.
Section 2.9 Leave of Absence. Any period during which:
(a) an Employee is absent with the prior consent of RadioShack, which consent shall be granted under uniform rules applied to all
Employees on a nondiscriminatory basis, but only if such person (i) is an Employee immediately prior to the commencement of such
period of authorized absence and resumes employment with RadioShack not later than the first working day following the expiration of
such period of authorized absence or (ii) enters into a contract with RadioShack prior to the absence which provides a right for the
Employee to return to work following the Leave of Absence, upon such terms and conditions as RadioShack may provide in its sole
discretion. For purposes of clarification, nothing in this Section 2.9(a) shall obligate or require RadioShack to enter into any contract with
any Employee or other person; or
3
(b) an Employee who is on qualified military serviceas defined under the Uniformed Services Employment and Reemployment
Rights Act of 1994, but only if such person is an Employee immediately prior to his qualified military service and resumes employment
with RadioShack within the period during which his reemployment rights are guaranteed by law.
Section 2.10 Monthly Plan Benefit Amount. A monthly amount equal to the Participants Plan Benefit, as may be
adjusted pursuant to Section 5.1(b) or (c) or Sections 5.2, 8.4, or 8.5 divided by 120.
Section 2.11 Participant. An Employee who has been selected by the Committee and has accepted a Plan Agreement as
provided in Article Three.
Section 2.12 Plan Agreement. The agreement between RadioShack and a Participant, entered into in accordance with Article
Three, as may be amended from time to time hereunder.
Section 2.13 Plan Year. The twelve month period beginning on January 1 and ending December 31, commencing with
calendar year January 1, 1998 through December 31, 1998.
Section 2.14 Plan Benefit. An amount equal to the Participants Benefit Service Years Credit multiplied by the
Participants Highest Average Plan Compensation multiplied by 10.
Section 2.15 Plan Compensation. The Participants annual base salary and any annual bonus earned by the Participant
during a Plan Year. Plan Compensation shall include any portion of the Participants base salary and bonus that is not includible in
taxable income because of a deferral election under any plan maintained by RadioShack.
Section 2.16 RadioShack. RadioShack Corporation, a Delaware corporation, and those subsidiary corporations in which
RadioShack owns at least fifty one percent (51%) of the total combined voting power of all classes of stock entitled to vote.
Section 2.17 RadioShack Subsidiary. Any corporation in which RadioShack owns at least fifty one percent (51%) of the
total combined voting power of all classes of stock entitled to vote.
Section 2.18 Retirement. The following classifications of Retirement as referred to in this Plan are as follows:
(a) Early Retirement. A Participants voluntary election to terminate employment, as opposed to an involuntary termination by
RadioShack, on or after attaining age fifty five (55) but prior to attaining age sixtyfive (65).
(b) Normal Retirement. A Participant's termination from employment with RadioShack upon attaining age sixty five (65).
(c) Late Retirement. A Participant's termination from employment with RadioShack after attaining age sixty five (65).
For this purpose, a Participants termination from employment will occur on the date of the Participants Separation from Service, and
notwithstanding anything contained herein to the contrary, the date on which such Separation from Service takes place shall be the date of
Retirement.
Section 2.19 Separation from Service. A Participants separation from servicefrom RadioShack shall fall within the
meaning set forth in Code section 409A.
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ARTICLE THREE
SELECTION OF PARTICIPANTS AND
AGREEMENT TO PARTICIPATE
Section 3.1 Existing Participants. The Plan is in addition to the RadioShack Corporation Officers Deferred Compensation
Plan, the Salary Continuation Plan for Executive Employees of RadioShack Corporation, the Special Compensation Plan No.1 for
RadioShack Corporation Executive Officers, and the Special Compensation Plan No. 2 for RadioShack Corporation Executive Officers
(collectively, the Salary Continuation Plans). The Salary Continuation Plans have certain participants who, as of December 31, 2005,
have been selected by the Committee, in its sole, absolute and exclusive discretion, to be Plan Participants and to have their benefits
transferred from the respective Salary Continuation Plans to the Plan by virtue of new Plan Agreements. Upon execution of new Plan
Agreements, these Participants will no longer be participants in their respective Salary Continuation Plans and will be Plan Participants.
Section 3.2 New Participants. On and after January 1, 2006, the Committee, in its sole, absolute and exclusive discretion,
shall select, from among the key executive employees of RadioShack who are serving as either a RadioShack Corporate, RadioShack
Division or a RadioShack Subsidiary officer, candidates for participation in the Plan.
ARTICLE FOUR
NO FUNDING OF PLAN BENEFITS
Section 4.1 All benefits under the Plan or a Plan Agreement represent an unsecured promise to pay by RadioShack
Corporation. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of RadioShack Corporation
resulting in the Participants having no greater rights than RadioShack Corporations general creditors; provided, however, nothing herein
shall prevent or prohibit RadioShack Corporation from establishing a trust or other arrangement for the purpose of providing for the
payment of the benefits payable under the Plan or Plan Agreement.
ARTICLE FIVE
BENEFITS PAYABLE TO PARTICIPANTS AND
TO BENEFICIARIES OF PARTICIPANTS
Section 5.1 Subject to the terms and conditions of the Plan, upon the Retirement of a Participant, RadioShack agrees to pay to
Participant a Retirement benefit as follows:
(a) Normal Retirement. If a Participant retires at the date of Normal Retirement, then RadioShack agrees to pay to Participant or to
the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Normal Retirement
benefits hereunder, all from its general assets, an amount equal to such Participants Plan Benefit, such sum to be paid as set forth in
Section 5.3 hereof.
(b) Early Retirement. If a Participant retires at a time that constitutes an Early Retirement, then RadioShack agrees to pay to
Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of
Early Retirement benefits hereunder, all from its general assets, an amount equal to such Participants Plan Benefit, reduced by five
percent (5%) per year for each year that Early Retirement precedes the date of Normal Retirement. Such year shall be a fiscal year
beginning on the date a Participant attains age fiftyfive (55). Any reduction for a part of a year shall be prorated on a daily basis
assuming a 365day year. Such amount shall be paid as set forth in Section 5.3 hereof.
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(c) Late Retirement. If a Participant retires at a date that constitutes Late Retirement, then RadioShack agrees to pay to Participant
or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Late
Retirement benefits hereunder, all from its general assets, an amount equal to such Participants Plan Benefit, reduced by a percentage
determined as follows:
Age on Date of Percent of Reduction
Late Retirement of Plan Benefit Amount
66 0%
67 0%
68 0%
69 0%
70 0%
71 20%
72 40%
73 60%
74 80%
75 100%
The percent of reduction of a Participants Plan Benefit shall be measured on a fiscal year beginning on the date of Participants date of
birth and shall commence on the day after the date a Participant attains age 70, and any reduction for a part of a year shall be prorated on a
daily basis at the applicable percentage assuming a 365day year. Such amount shall be paid as set forth in Section 5.3 hereof.
Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant, but only if the Participant is an
Employee of RadioShack at his death (except as set forth in Section 5.2(b) below) and is not being paid benefits pursuant to a Plan
Agreement at such time, RadioShack agrees to pay to his Beneficiary from its general assets an amount equal to such Participants Plan
Benefit. Such amount shall be paid as set forth in Section 5.3 hereof with respect to such benefits; however, it is further provided that:
(a) if a Participant dies while an Employee of RadioShack after the date of his Normal Retirement, then the amount payable to his
Beneficiary upon a Participants death shall be reduced as set forth in Section 5.1(c) hereof; and
(b) the death of a Participant within the first year after involuntary termination of employment with RadioShack as provided in
Section 8.6 shall not defeat the right of such Participants Beneficiary to receive benefits under this Section 5.2 so long as an event
described in Section 8.5(a) or (b) occurs within one year of the date of termination of the Participants employment.
Section 5.3 Except as provided in Section 8.5, the Plan Benefit due and payable to a Participant or his Beneficiary, as the
case may be, upon the Normal Retirement, Early Retirement, or the Late Retirement of a Participant, or upon the death of a Participant,
shall be paid in one hundred twenty (120) equal monthly installments in an amount equal to the Participants Monthly Plan Benefit
Amount, commencing on the first business day of the seventh month following the date of the Participants Retirement or, if earlier, on
the date of the Participant's death. Notwithstanding the foregoing, in the event of a Change in Control, amounts payable to a Participant or
his Beneficiary shall be paid in the amount and manner specified in Sections 8.5 and 8.6.
Section 5.4 Until actually paid and delivered to the Participant or to the Beneficiary entitled to same, none of the benefits
payable by RadioShack under this Plan or any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his
Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at
law, in equity or in bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any
manner anticipate or dispose of the benefits to which he is entitled or may become entitled under the Plan or any Plan Agreement.
6
Section 5.5
(a) During the period that Participant is receiving benefits under a Plan Agreement and for one (1) year after cessation of payment of
benefits, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world
that RadioShack (or a RadioShack Subsidiary) or one of its dealers or franchisees sells Consumer Electronic Products (as hereinafter
defined) at retail, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint
operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in
the ownership, management, direction, or control or in any other manner be connected with, any business selling Consumer Electronic
Products at retail which is at the time of Participants engaging in such conduct competitive with such products sold by RadioShack
except as a stockholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or
in the overthecounter market by a member of the National Association of Securities Dealers. Consumer Electronic Productsare
those type of products sold at the retail level to the ultimate customer as are advertised by RadioShack. The manufacture of Consumer
Electronic Products or the sale of Consumer Electronic Products at levels of distribution other than the retail level is not considered a
violation of this covenant.
(b) In the event that a Participant engages in any of the activities described in Section 5.5(a), RadioShack will give notice to the
Participant specifying in detail the alleged violation of Section 5.5(a). Participant will be allowed ninety (90) days to cure such default. If
the Committee feels there is continuing competition, then, without any further notice or opportunity to cure, and upon determination by
the Committee that such a Participant is engaged in such activities, such Committees decision to be conclusive and binding upon all
concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, RadioShacks obligation
to a Participant to pay any benefits hereunder shall automatically cease and terminate and RadioShack shall have no further obligation to
such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. RadioShack may also enforce this provision by suit for
damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both.
Section 5.6 RadioShack may liquidate out of the interest of a Participant hereunder, but only as Retirement or death benefits
become due and payable hereunder, any outstanding loan or loans or other indebtedness of Participant made in the ordinary course of the
employment relationship, provided that (i) the entire amount of reduction in such benefit in any taxable year of RadioShack shall not
exceed $5,000, and (ii) the reduction shall be made at the same time and in the same amount as the loan or other indebtedness otherwise
would have been due and collected from the Participant.
Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, and subject to the requirements of
Code section 409A, a Participant's participation in the Plan shall continue during his Disability or his taking a Leave of Absence
notwithstanding the status of the Participants employment with RadioShack. Subject to the requirements of Code section 409A, a
Participant who is Disabled or on Leave of Absence shall notify RadioShack of his date of Retirement in such manner as may be specified
by RadioShack. Such notice shall be deemed to be received when actually received by RadioShack in the manner specified.
Section 5.8 Notwithstanding anything in the Plan to the contrary, the Committee, in its sole discretion, may accelerate or
delay the payment of any benefits under the Plan under the circumstances, and to the extent, required or permitted by Code section 409A.
ARTICLE SIX
AMENDMENTS OF PLAN AGREEMENTS
Section 6.1 The Committee may enter into amendments to the Plan Agreement with any Participant for the purpose of
amending any provision of this Plan as it might apply to a Participant. In such cases, the acceptance of an amendment by a Participant is
voluntary and until the amended Plan Agreement has been submitted to and accepted by him, it shall not be effective.
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ARTICLE SEVEN
BENEFICIARIES OF PARTICIPANTS
Section 7.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to
whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one (1) or more persons or
entities, such as dependents, persons who are natural objects of the Participants bounty, an inter vivos or testamentary trust, or his
estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his
Beneficiary shall be made by the Participant on a Beneficiary Designation Form to be furnished by the Committee and filed with it.
Section 7.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory Beneficiary
Designation Forms with the Committee.
Section 7.3 In the event a Participant designates more than one (1) Beneficiary to receive benefit payments simultaneously,
each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage
designation has been made, then payments shall be made to each such Beneficiary in equal shares.
Section 7.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named,
or if the designated Beneficiary dies before complete payment of the deceased Participants benefits have been made and no Beneficiary
was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the
deceased Participants heirsatlaw determined in accordance with the laws of descent and distribution in force at the date hereof in the
State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in
Texas. Such benefits (or the balance thereof) shall be paid at the time and in the form otherwise provided for in the Plan.
Section 7.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in
the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the
case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best
interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one or more of
the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or
other duly appointed legal representative, in which event payment shall be made to such representative:
(a) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the
payment;
(b) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those
dependents as to whom the person entitled has the duty of support;
(c) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those
dependents as to whom the person entitled has the duty of support; or
(d) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of
those dependents as to whom the person entitled has the duty of support.
The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obligated to see to
the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the
Committee shall operate as a complete discharge of the obligations of RadioShack and of the Committee.
Section 7.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall
have the right to withhold such payments until the matter is finally adjudicated or the Committee may direct RadioShack to bring a suit for
interpleader in any appropriate court, pay any amounts due into the court, and RadioShack shall have the right to recover its reasonable
attorneys fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this
Plan, shall fully discharge the Committee and RadioShack from all further obligations with respect to such payments. In acting under this
provision, the Committee, where appropriate, shall take all steps necessary to ensure that any delay in payment to a Beneficiary complies
with the requirements of Treas. Reg. section 1.409A3(g) including, where payments are withheld, by making any required payments by
no later than the end of the year in which the matter is finally adjudicated.
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ARTICLE EIGHT
TERMINATION OF PARTICIPATION
Section 8.1 Except as provided in Sections 5.2(b), 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, termination of a Participants
employment with RadioShack other than by reason of Retirement or death, whether by action of RadioShack or the Participants
resignation, shall terminate the Participants participation in the Plan (for the sake of clarity, a cessation of active employment during a
period of a Leave of Absence (including as a result of a Disability) will not be deemed a termination of employment for purposes of this
sentence, unless such cessation results in a Separation from Service). Neither the Plan nor the Plan Agreement shall in any way obligate
RadioShack to continue the employment of a Participant, nor will either limit the right of RadioShack to terminate a Participants
employment at any time, for any reason, with or without cause.
Section 8.2 Except as provided in Sections 8.4, 8.5, 8.6, 10.1 and 10.2 hereof, participation in the Plan by a Participant shall
also terminate if the Plan or his Plan Agreement is terminated by RadioShack in accordance with Article Ten.
Section 8.3 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, upon termination of a Participants
participation in the Plan, all of RadioShacks obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and
each of them, shall terminate and be of no further effect.
Section 8.4 Except as provided in Sections 8.5, 8.6, 10.1 and 10.2, if a Participants participation in the Plan is terminated,
by:
(a) termination of the Plan;
(b) termination of a Plan Agreement; or
(c) termination of employment for any reasons other than
(i) death or Retirement, which shall be governed by Article Five, or
(ii) dishonest or fraudulent conduct of a Participant or indictment of a Participant for a felony crime involving moral turpitude, in
which event no vesting under Section 8.4, 8.6, 10.1, or 10.2 shall occur,
then such Participant shall be entitled, as set forth below, to a percentage of his Plan Benefit as follows:
Age Attained at Date of Event Set
Forth in Section 8.4(a), (b) or (c) % Vested
Age 54 or younger 0%
Age 55 to age 65 A percent as determined
in 5.1(b) hereof
Age 65 to age 70 100%
Age 70 to age 75 A percent as determined
in 5.1(c) hereto
Age 75 and thereafter 0%
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The amount payable under this Section 8.4 shall be determined as of the date of the event set forth in Section 8.4(a), (b) or (c) hereof and
such amount as so determined at that time shall not be altered or changed thereafter, except that the provisions of Section 5.5 hereof shall
remain fully applicable during the Participant's employment by RadioShack, during the payment of benefits under this Section 8.4 and for
one (1) year after the later of termination of employment or cessation of payment of benefits. The amount payable under this Section 8.4
shall be paid as set forth in Section 5.3 hereunder to commence on the first business day of the seventh month following the date of the
Participants Separation from Service.
Section 8.5 Notwithstanding anything to the contrary in the Plan,
(a) In the event of a Change in Control, every Participant who is currently an active Employee immediately shall be vested in his
Plan Benefit determined without regard to Section 5.1(b) but subject to Section 5.1(c). Such Plan Benefit shall be payable in a lump sum
on the first day of the month next following the date of the Participants Separation from Service or, if later, and to the extent that such
Participant is a specified employee,within the meaning of Code section 409A, on the date of his or her Separation from Service, on the
first business day of the seventh month following the date of Separation from Service (or, if earlier, the date of the Participants death) to
the extent such delayed payment is required in order to avoid a prohibited distribution under Code section 409A(a)(2) (with the date of the
Separation from Service referred to herein as the Valuation Date). Notwithstanding the foregoing, such lump sum payment shall only
be payable if the Participants Separation from Service occurs within two years following the Change in Control, and shall otherwise be
payable pursuant to Section 5.3 hereof. Such lump sum payment shall equal the present value of the Participant's Plan Benefit (as adjusted
pursuant to Section 5.1(c), as applicable) discounted for interest at the Pension Benefit Guaranty Corporation's Immediate Annuity Rate
used to value benefits for singleemployer plans terminating on the date of the Separation from Service compounded semiannually.
(b)(i) In the event of a Change in Control, any Participant or Beneficiary who, on the date of the Change in Control, was receiving
benefits under the Plan shall be entitled to receive a lump sum equal to the present value of the remaining Plan Benefit on the date of the
Change in Control, calculated in a manner consistent with Section 8.5(a).
(b)(ii) In the event of a Change in Control, any Participant who, on the date of the Change in Control, had Separated from Service
with the right to receive benefits under the Plan but had not yet commenced receiving benefits, or any Beneficiary of such a Participant,
shall be entitled to receive a lump sum on the first business day of the seventh month following the date of Separation from Service equal
to the present value of the remaining Plan Benefit, calculated in a manner consistent with Section 8.5(a) hereof.
For purposes of 8.5(b), the Valuation Dateshall be the date of the Change in Control.
Section 8.6 In the event that a Participant (other than a Participant described in Section 8.5(b)) is subject to an involuntary
termination by RadioShack that constitutes a Separation from Service for any reason other than those reasons set forth in Section
8.4(c)(ii), and within a one year period beginning on the date of such termination there occurs a Change in Control (that satisfies the last
paragraph of Section 2.4 hereof), then such Participant, or his Beneficiary if such Participant dies after termination of employment, shall
be entitled to receive a lump sum equal to the present value of the Participant's remaining Plan Benefit on the date of the Change in
Control (but to the extent that such Participant is a specified employee,within the meaning of Code section 409A, on the date of his or
her Separation from Service, no earlier than the first business day of the seventh month following the date of Separation from
Service). The lump sum amount payable under this Section 8.6 shall be determined in a manner consistent with Section 8.5(a). For
purposes of this Section 8.6, the Valuation Dateshall be the date of the Change in Control.
Section 8.7 Notwithstanding any provision to the contrary in the Plan, upon a Change in Control, the provisions of Sections
5.5 and 5.6 shall lapse and become null and void.
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ARTICLE NINE
ADMINISTRATION OF THE PLAN
Section 9.1 The Plan shall be administered by the Committee.
Section 9.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible
in its sole, absolute and exclusive discretion for:
(a) construing and interpreting the Plan;
(b) computing and certifying to RadioShack the amount of benefits to be provided in each Plan Agreement for the Participant or the
Beneficiary of the Participant; and
(c) determining the right of a Participant or a Beneficiary to payments under the Plan and otherwise authorizing disbursements of
such payments by RadioShack.
In these and all other respects, the Committees decisions shall be conclusive and binding upon all concerned. The Plan is intended to
comply with the requirements of Code section 409A, to the extent applicable, and shall be administered and interpreted by the Committee
accordingly.
Section 9.3 RadioShack agrees to hold harmless and indemnify the members of the Committee against any and all expenses,
claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the
cost of defense and attorneys fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than
losses resulting from any such Committee members fraud or willful misconduct.
ARTICLE TEN
TERMINATION OR AMENDMENT OF THE PLAN
OR PLAN AGREEMENTS
Section 10.1 RadioShack reserves the right to terminate or amend this Plan or any Plan Agreement, in whole or in part, at any
time, from time to time, by resolution of the Committee, provided, however, that, subject to Section 10.3, no amendment to the Plan or to
any Plan Agreement shall alter the vested rights of a Participant or Beneficiary applicable on the effective date of such termination or
amendment, and such vested rights shall remain unchanged. Rights are deemed to have vested if benefits are actually being paid or if the
only condition precedent to the payment of benefits is the termination of employment (unless terminated for reasons set forth in Section
8.4(c)(ii), in which event benefits are forfeited) with RadioShack or the giving notice of Retirement or the occurrence of an event
described in Section 8.5(a) or (b).
Section 10.2 Notwithstanding anything to the contrary in the Plan, but subject to Section 10.3,
(a) Sections 8.5, 8.6, 8.7 and this Section 10.2 shall not be amended or terminated at any time.
(b) For a period of one (1) year following a Change in Control, the Plan or Plan Agreement shall not be terminated or amended in
any way, nor shall the manner in which the Plan is administered be changed in a way that adversely affects the Participantsright to
existing or future RadioShackprovided benefits or contributions provided hereunder, including, but not limited to, any change in, or to,
the eligibility requirements, benefit formulae and manner and optional forms of payments.
(c) Any amendment or termination of the Plan prior to a Change in Control that (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with, or in
anticipation of, a Change in Control, shall be null and void and shall have no effect whatsoever.
11
(d) In the event the Plan or any Plan Agreement is terminated or adversely amended to the detriment of any Participant and within a
oneyear period from the effective date of any such amendment or termination a Change in Control occurs, then any Participant so
affected whose employment with RadioShack Corporation is subject to a termination that constitutes a Separation from Service, whether
voluntarily or involuntarily, within a threeyear period from the date of the Change in Control shall be entitled to receive those benefits
set forth in Section 8.5 hereof to the same extent and in the same amounts as though such amendment or termination of the Plan or Plan
Agreement had not occurred. This Section 10.2(d) shall not apply to any Participant who, as of the date of the Change in Control, has
previously retired or has otherwise voluntarily terminated his employment with RadioShack Corporation.
The restrictions on amendments set forth in this provision shall not apply to the amendment to the Plan adopted on November 6, 2008 and
effective on December 31, 2008.
Section 10.3 Notwithstanding anything in Section 6.1, 10.1 or 10.2 to the contrary, the Committee may amend the Plan or
any Plan Agreement at any time, without the consent of any Participant or Beneficiary, to the extent the Committee deems such
amendment to be necessary to comply with the requirements of any applicable tax laws, securities laws, accounting rules and other
applicable state and federal laws.
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined
under the laws of the State of Texas.
Section 11.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine
gender. The words herein, hereunderand other similar compounds of the word hereshall mean and refer to the entire Plan and
Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as
though in the plural or singular where they would so apply.
Section 11.3 Any action brought by a Participant under the Plan or Plan Agreement shall only be brought in the appropriate
state or federal court for Tarrant County, Texas.
Section 11.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28
for all purposes of this Plan.
Section 11.5 This Plan shall be binding upon and inure to the benefit of any successor of RadioShack and any such successor
shall be deemed substituted for RadioShack under the terms of this Plan. As used in this Plan, the term successorshall include any
person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or
substantially all of the assets or business of RadioShack.
Section 11.6 A Participant shall not be required to mitigate the amount of any payment provided for in this Plan by seeking
other employment or otherwise.
Section 11.7 In the event that a Participant institutes any legal action to enforce his rights under, or to recover damages for
breach of any of the terms of this Plan or any Plan Agreement, the Participant, if he is the prevailing party, shall be entitled to recover
from RadioShack all actual expenses incurred in the prosecution of said suit including but not limited to attorneys' fees, court costs, and all
other actual expenses. All reimbursements of eligible expenses under this provision shall be made no later than the last day of the
Participants tax year following the taxable year in which the expenses were incurred. The amount of expenses eligible for
reimbursement under this provision in any calendar year shall not affect the amount of expenses eligible for reimbursement in any other
calendar year, and a Participants right to reimbursement shall not be subject to liquidation or exchange for any other benefit. In all
events, reimbursement shall be made in accordance with Treas. Reg. 1.409A3(i)(1)(iv). Notwithstanding the foregoing, a Participant
shall only be entitled to reimbursement of the expenses described above if he is the prevailing party in such action. If RadioShack
provides any reimbursements in accordance with this provision, and the Participant ultimately is not the prevailing party, the Participant
shall be required to refund to RadioShack all amounts previously paid.
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Section 11.8 Notwithstanding all other provisions in the Plan, in the event a Participant is entitled to benefits under two (2)
separate sections of the Plan, the maximum a Participant may receive under this Plan is his Plan Benefit, payable in accordance with
Section 5.3 hereof (or Article Eight, if applicable).
Section 11.9 Notwithstanding any other provision of the Plan to the contrary, until the Plan is amended and restated to reflect
the requirements of Code section 409A, the Plan shall be administered in accordance with all applicable requirements of Code section
409A and the regulations or guidance issued with regard thereto, and any distribution, acceleration or election feature that could result in
the early inclusion in gross income shall be deemed restricted or limited to the extent necessary to avoid such result.
Section 11.10 It is intended that the Plan and the Committees exercise of authority or discretion hereunder shall comply with
the provisions of Code section 409A and the Treasury Regulations relating thereto so as not to subject a Participant to the payment of
interest and tax penalty which may be imposed under Code section 409A. In furtherance of this interest, to the extent that any regulations
or other guidance issued under Code section 409A after the effective date of the second amendment and restatement of this Plan would
result in a Participant being subject to payment of interest and tax penalty under Code section 409A, the Committee may amend the Plan,
without the Participants consent, including with respect to the timing of payment of benefits, in order to avoid the application of or to
comply with the requirements of Code section 409A; provided, however, that RadioShack makes no representation that compensation or
benefits payable under this Plan shall be exempt from or comply with Code section 409A and makes no representation to preclude Code
section 409A from applying to the compensation or benefits payable under the Plan.
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Exhibit 10.46
OFFICERSSEVERANCE PROGRAM
1. PURPOSE OF PROGRAM. The purpose of the Second Amended and Restated RadioShack Corporation OfficersSeverance
Program (the Program) is to retain wellqualified individuals as officers of RadioShack Corporation, and to provide a benefit to each
such individual if his/her employment is terminated prior to the third anniversary of the Effective Date (as defined below), under
qualifying circumstances. The Program is intended to qualify as a tophatplan under the Employee Retirement Income Security Act
of 1974, as amended (ERISA), in that it is intended to be an employee benefit plan(as such term is defined under Section 3(3) of
ERISA) which is unfunded and provides benefits only to a select group of management or highly compensated employees of the Company
and/or its Subsidiaries. The Program has been amended, effective as of December 31, 2010.
2. DEFINITIONS. The following terms shall have the following meanings unless the context indicates otherwise:
(a) Accrued Compensationshall mean an amount which shall include all amounts earned or accrued through the Termination Date (as
hereinafter defined) but not paid as of the Termination Date, including (i) base salary, (ii) reimbursement for reasonable and necessary
expenses incurred by the Participant (as hereinafter defined) on behalf of the Company during the period ending on the Termination Date
in accordance with the Companys business expense reimbursement policies, (iii) vacation pay as required by law, and (iv) bonuses and
incentive compensation; provided that the Program shall in no event be deemed to modify, alter or amend the terms of any plan, policy,
practice or program of, or any contract or agreement with, the Company or any Subsidiary applicable to the time and form of payment of
any such amounts, and all amounts shall be paid in accordance with the terms of such plan, policy, practice or program under which the
amounts have accrued.
(b) Applicable Benefits Schedulewith respect to a Participant shall mean the Benefits Schedule applicable to the Participant based on
his or her position with the Company or, if applicable, a Subsidiary.
(c) BeneficiaryThe Participants estate shall be deemed to be the Participants designated Beneficiary.
(d) Benefits Scheduleshall mean a separate Benefits Schedule, if any, adopted as part of the Program, which Schedule sets forth
certain provisions relating to the determination of eligibility for and/or the amount of Severance Benefits payable under the Program.
(e) Boardshall mean the Board of Directors of the Company.
(f) Causemeans (i) the Participant is convicted of a felony or of any crime involving moral turpitude, dishonesty, fraud, theft or
financial impropriety; or (ii) a reasonable
1
determination by the Committee that, (A) the Participant has willfully and continuously failed to perform his/her duties (other than such
failure resulting from incapacity due to physical or mental illness), after a written demand for corrected performance is delivered to the
Participant which specifically identifies the manner(s) in which the Participant has not performed his/her duties, (B) the Participant has
engaged in illegal conduct, an act of dishonesty, moral turpitude, dishonesty, fraud, theft, financial impropriety or gross misconduct
injurious to the Company or any Subsidiary, or (C) the Participant has violated a material provision of the Companys Code of Ethics,
Financial Code of Ethics, or Participants fiduciary duty to the Company or any Subsidiary.
(g) Codemeans the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder, as
amended. Any references to Code sections or related Treasury Regulations are intended to include any successor provisions thereto.
(h) Committeeshall mean (i) the Board or (ii) a committee or subcommittee of the Board as from time to time appointed by the
Board from among its members. The initial Committee shall be the Boards Management Development and Compensation
Committee. In the absence of an appointed Committee, the Board shall function as the Committee under the Program.
(i) Companyshall mean RadioShack Corporation, a Delaware corporation, including any successor entity or any successor to the
assets or business of the Company. Companyshall not include any Subsidiary.
(j) CIC Agreementshall include any termination protection agreement or similar agreement entered into by the Company or any
Subsidiary and a Participant and the Companys Third Amended and Restated Termination Protection Plan Level Iby which a
Participant may be covered.
(k) Effective Dateshall mean December 31, 2008.
(l) ERISAshall have the meaning ascribed to such term in Section 1.
(m) Good Reasonshall have the meaning ascribed to such term in a Participants Applicable Benefits Schedule if said schedule
contains a definition of, and thus a right to terminate for, Good Reason.
(n) Participant(s)shall have the meaning set forth in Section 3.
(o) Programshall have the meaning ascribed to such term in Section 1.
(p) Qualifying Terminationshall mean (i) involuntary termination by the Company of the employment of the Participant with the
Company and all of its Subsidiaries for any reason other than death, disability or Cause, or (ii) resignation of the Participant for Good
Reason if such Participants Applicable Benefits Schedule contains a right to terminate for Good Reason.
2
(q) Retention Periodshall mean the period beginning on the Effective Date and ending on the third anniversary of the Effective Date.
(r) Severance Benefitsshall mean the compensation and benefits provided to a Terminated Participant pursuant to Sections 5 and 6 of
the Program.
(s) Severance Periodshall mean the number of months a specific Terminated Participant is entitled to receive Severance Benefits,
which period shall be expressly provided for by the Committee with respect to the Participants participation herein and set forth on the
Applicable Benefits Schedule.
(t) Subsidiaryshall mean a corporation of which the Company directly or indirectly owns more than fifty percent (50%) of the
voting stock(meaning the capital stock of any class or classes having general voting power under ordinary circumstances, in the
absence of contingencies, to elect the directors of a corporation) or any other business entity in which the Company directly or indirectly
has an ownership interest of more than fifty percent (50%).
(u) Terminated Participantshall mean a Participant whose employment with the Company and/or a Subsidiary has been terminated
under circumstances constituting a Qualifying Termination as described in Section 5 below.
(v) Termination Dateshall mean the date a Terminated Participants employment with the Company and/or a Subsidiary is
terminated as described in Section 5 below.
3. PARTICIPATION. All executive officers, senior vice presidents, vice presidents, assistant secretaries and assistant treasurers of the
Company (collectively, the Participants) shall participate in the Program. An officer of a Subsidiary of the Company shall be
considered a Participant only if the Committee has specifically designated such officer as such (as well as designating such officers
applicable Benefits Schedule as described below), and such designation is in effect as of the Termination Date. Benefits Schedule I shall
apply only to the Chief Executive Officer of the Company. Benefits Schedule II shall apply only to the executive officers of the Company
(other than the Chief Executive Officer of the Company). Benefits Schedule III shall apply only to the senior vice presidents of the
Company. Benefits Schedule IV shall apply to the vice presidents, assistant secretaries and assistant treasurers of the
Company. Notwithstanding the preceding, if the Committee specifically designates an officer of a Subsidiary as a Participant in the
Program, the Committee may designate one of Benefits Schedules I through IV to apply to such officer, in which case references to
Companyshall refer to the Subsidiary as deemed applicable.
4. ADMINISTRATION.
(a) Responsibility. The Committee shall have the responsibility, in its sole discretion, to control, operate, manage and administer the
Program in accordance with its terms.
(b) Authority of the Committee. The Committee shall have the maximum discretionary authority permitted by law that may be
necessary to enable it to discharge its responsibilities with respect to the Program, including but not limited to the following:
3
(i) to determine eligibility for participation in the Program;
(ii) to establish the terms and provisions of, and to adopt as part of the Program, one or more Benefits Schedules setting forth, among
other things, the Severance Period and such other terms and provisions as the Committee shall determine;
(iii) to calculate a Participants Severance Benefits;
(iv) to correct any defect, supply any omission, or reconcile any inconsistency in the Program in such manner and to such extent as it
shall deem appropriate in its sole discretion to carry the same into effect;
(v) to issue administrative guidelines as an aid to administer the Program and make changes in such guidelines as it from time to time
deems proper;
(vi) to make rules for carrying out and administering the Program and make changes in such rules as it from time to time deems proper;
(vii) to the extent permitted under the Program, grant waivers of Program terms, conditions, restrictions, and limitations;
(viii) to construe and interpret the Program and make reasonable determinations as to a Participants eligibility for benefits under the
Program, including determinations as to Qualifying Termination and disability; and
(ix) to take any and all other actions it deems necessary or advisable for the proper operation or administration of the Program.
(c) Action by the Committee. Except as may otherwise be required or permitted under an applicable charter, the Committee may (i) act
only by a majority of its members (provided that any determination of the Committee may be made, without a meeting, by a writing or
writings signed by all of the members of the Committee), and (ii) may authorize any one or more of its members to execute and deliver
documents on behalf of the Committee.
(d) Delegation of Authority. The Committee has delegated administrative duties to the Company. In addition, the Committee, or any
person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Program. The Committee may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Program and may rely upon any opinion or computation received from any
such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be
paid by the Company, or the Subsidiary whose employees have benefited from the Program, as determined by the Committee.
(e) Determinations and Interpretations by the Committee. All determinations and interpretations made by the Committee or by its
delegates shall be binding and conclusive to
4
the maximum extent permitted by law on all Participants and their heirs, successors, and legal representatives.
(f) Information. The Company and its Subsidiaries shall furnish to the Committee in writing all information the Committee may deem
appropriate for the exercise of its powers and duties in the administration of the Program. Such information may include, but shall not be
limited to, the full names of all Participants, their earnings and their dates of birth, employment, retirement, death or other termination of
employment. Such information shall be conclusive for all purposes of the Program, and the Committee shall be entitled to rely thereon
without any investigation thereof.
(g) SelfInterest. No member of the Committee may act, vote or otherwise influence a decision of the Committee specifically relating
to his/her benefits, if any, under the Program.
5. TERMINATION OF EMPLOYMENT. If the employment of a Participant is terminated during the Retention Period in
circumstances constituting a Qualifying Termination, such Terminated Participant shall be entitled to receive Severance Benefits in
accordance with Section 6 below.
6. SEVERANCE BENEFITS. In the event a Participant is entitled to receive Severance Benefits pursuant to Section 5 above, the
Terminated Participant shall receive a payment equal to the Severance Benefits determined in accordance with the Applicable Benefits
Schedule.
7. PARTICIPANT COVENANTS. As a condition to receiving the right to participate in the Program and any benefits hereunder, each
Participant shall enter into an agreement with the Company or Subsidiary, if deemed applicable, providing for confidentiality and
nonsolicitation obligations.
8. CLAIMS.
(a) Claims Procedure. If any Participant or Beneficiary, or their legal representative, has a claim for benefits which is not being paid,
such claimant may file a written claim with the Committee setting forth the amount and nature of the claim, supporting facts, and the
claimants address. A claimant must file any such claim within sixty (60) days after a Participants Termination Date. Written notice of
the disposition of a claim by the Committee shall be furnished to the claimant within ninety (90) days after the claim is filed. In the event
of special circumstances, the Committee may extend the period for determination for up to an additional ninety (90) days, in which case it
shall so advise the claimant. If the claim is denied, the reasons for the denial shall be specifically set forth in writing, pertinent provisions
of the Program shall be cited, including an explanation of the Programs claim review procedure, and, if the claim is perfectible, an
explanation as to how the claimant can perfect the claim shall be provided.
(b) Claims Review Procedure. If a claimant whose claim has been denied wishes further consideration of his/her claim, he/she may
request the Committee to review his/her claim in a written statement of the claimants position filed with the Committee no later
5
than sixty (60) days after receipt of the written notification provided for in Section 8(a) above. The Committee shall fully and fairly
review the matter and shall promptly advise the claimant, in writing, of its decision within the next sixty (60) days. Due to special
circumstances, the Committee may extend the period for determination for up to an additional sixty (60) days.
9. TAXES.
(a) Withholding Taxes. The Company or, if deemed applicable, a Subsidiary shall be entitled to withhold from any and all payments
made to a Participant under the Program all federal, state, local and/or other taxes or imposts which the Company or the subject Subsidiary
determines are required to be so withheld from such payments or by reason of any other payments made to or on behalf of the Participant
or for his/her benefit hereunder.
(b) No Guarantee of Tax Consequences. No person connected with the Program in any capacity, including, but not limited to, the
Company and any Subsidiary and their directors, officers, agents and employees makes any representation, commitment, or guarantee that
any tax treatment, including, but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable with
respect to amounts deferred under the Program, or paid to or for the benefit of a Participant under the Program, or that such tax treatment
will apply to or be available to a Participant on account of participation in the Program.
10. TERM OF PROGRAM. The Program shall be effective as of the Effective Date and shall remain in effect until the Board
terminates the Program in accordance with Section 11(b) below.
11. AMENDMENT AND TERMINATION.
(a) Amendment of Program. The Program may be amended by the Board at any time with or without prior notice; provided, however,
that, except as provided in Section 11(d) hereof, any amendment of the Program during the thirty six (36)month period immediately
following the Effective Date which is less favorable to a Participant shall not be effective as to such Participant unless the Participant shall
have consented thereto in writing.
(b) Termination of Program. The Program may be terminated or suspended by the Board at any time with or without prior notice;
provided, however, that any termination or suspension to be effective during the thirty six (36)month period immediately following the
Effective Date shall not be effective with respect to any Participant unless such Participant shall have consented thereto in writing.
(c) No Adverse Affect. If the Program is amended, terminated, or suspended in accordance with Section 11(a) or 11(b) above, such
action shall not adversely affect the benefits under the Program to which any Terminated Participant (as of the date of amendment,
termination or suspension) is entitled, unless such amendment is made pursuant to Section 11(d) hereof.
(d) Code Section 409A. It is intended that this Program and the Committees exercise of authority or discretion hereunder shall be
exempt from or comply with the provisions of Code section 409A and the treasury regulations relating thereto so as not to subject a
6
Participant to the payment of interest and tax penalty which may be imposed under Code section 409A. In furtherance of this interest, to
the extent that any regulations or other guidance issued under Code section 409A after the Effective Date would result in a Participant
being subject to payment of interest and tax penalty under Code section 409A, the Committee may amend this Program, without the
consent of the Participant, including with respect to the timing of payment of benefits, in order to avoid the application of, or to comply
with, Code section 409A and to the extent permitted under Code section 409A; provided, however, that the Company makes no
representation that compensation or benefits payable under this Program shall be exempt from or comply with Code section 409A and
makes no representation to preclude Code section 409A from applying to the compensation or benefits payable under the Program.
With respect to any amount of expenses eligible for reimbursement or the provision of any inkind benefits under this Program, to the
Participants gross income for federal income tax purposes, such expenses (including, without limitation, expenses associated with
inkind benefits) will be reimbursed by the Company no later than December 31st of the year following the year in which the Participant
incurs the related expenses. In no event shall the reimbursements or inkind benefits to be provided by the Company in one taxable year
affect the amount of reimbursements or inkind benefits to be provided in any other taxable year, nor will the Participants right to
reimbursement or inkind benefits be subject to liquidation or exchange for another benefit.
12. MISCELLANEOUS.
(a) Offset. Except as would otherwise result in a violation of Code section 409A, Severance Benefits shall be reduced by any severance
or similar payment or benefit made or provided by the Company or any Subsidiary to the Participant pursuant to (i) any severance plan,
program, policy or similar arrangement of the Company or any Subsidiary of the Company (including without limitation the CIC
Agreement), (ii) any employment agreement between the Company or any Subsidiary and the Participant, and (iii) any federal, state, local,
foreign or other applicable statute, law (common or otherwise), rule, regulation or ordinance. For avoidance of doubt, (A) any payment or
benefit which is Accrued Compensation shall not be considered a severance or similar payment or benefit under this Section 12(a), and
(B) the Program is not intended to, and shall not, result in any duplication of payments or benefits to any Participant.
(b) No Right, Title, or Interest in Company Assets. Participants shall have no right, title, or interest whatsoever in or to any assets of the
Company or its Subsidiaries or any investments that the Company or its Subsidiaries may make to aid it in meeting its obligations under
the Program. Nothing contained in the Program, and no action taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company or its Subsidiaries and any Participant, Beneficiary, legal representative
or any other person. To the extent that any person acquires a right to receive payments from the Company or a Subsidiary under the
Program, such right shall be no greater than the right of an unsecured general creditor of the Company or the subject Subsidiary. Subject
to this Section 12(b), all payments to be made hereunder shall be paid from the general funds of the Company or its Subsidiaries and no
special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts.
7
(c) No Right to Continued Employment. The Participants rights, if any, to continue to serve the Company or a Subsidiary as an
employee shall not be enlarged or otherwise affected by his/her designation as a Participant under the Program, and the Company or the
applicable Subsidiary reserves the right to terminate the employment of any employee at any time. The adoption of the Program shall not
be deemed to give any employee, or any other individual any right to be selected as a Participant or to continued employment with the
Company or any Subsidiary.
(d) Other Rights. The Program shall not affect or impair the rights or obligations of the Company, its Subsidiaries or a Participant under
any other written plan, contract, arrangement, or pension, profit sharing or other compensation plan.
(e) Governing Law. The Program shall be governed by and construed in accordance with the laws of the State of Texas without
reference to principles of conflict of laws, except as superseded by applicable federal law (including, without limitation, ERISA).
(f) Severability. If any term or condition of the Program shall be invalid or unenforceable to any extent or in any application, then the
remainder of the Program, with the exception of such invalid or unenforceable provision (but only to the extent that such term or condition
cannot be appropriately reformed or modified), shall not be affected thereby and shall continue in effect and application to its fullest
extent.
(g) Incapacity. If the Committee determines that a Participant is unable to care for his/her affairs because of illness or accident or
because he or she is a minor, any benefit due the Participant may be paid to the Participants spouse or to any other person deemed by the
Committee to have incurred expense for such Participant (including a duly appointed guardian, committee or other legal representative),
and any such payment shall be a complete discharge of the Companys or the subject Subsidiarys obligations hereunder.
(h) Transferability of Rights. The Company and its Subsidiaries shall have the unrestricted right to transfer its obligations under the
Program with respect to one or more Participants to any person, including, but not limited to, any purchaser of all or any part of the
Companys or any of its Subsidiariesassets or business. No Participant or Beneficiary shall have any right to commute, encumber,
transfer or otherwise dispose of or alienate any present or future right or expectancy which the Participant or Beneficiary may have at any
time to receive payments of benefits hereunder, which benefits and the right thereto are expressly declared to be nonassignable and
nontransferable, except to the extent required by law. Any attempt to transfer or assign a benefit, or any rights granted hereunder, by a
Participant or the spouse of a Participant shall, in the sole discretion of the Committee (after consideration of such facts as it deems
pertinent), be grounds for terminating any rights of the Participant or Beneficiary to any portion of the Program benefits not previously
paid.
(i) Interest. In the event any payment to a Participant under the Program is not paid within thirty (30) days after it is due and Participant
notifies the Company and the Company fails to make such payment (to the extent such payment is undisputed), such payment
8
shall thereafter bear interest at the prime rate from time to time as published in The Wall Street Journal, Midwest Edition; provided,
however, that no interest shall accrue to the extent, and during the period that, any payment to a specified employee,within the
meaning of Code section 409A, is subject to a delay required to comply with Code section 409A.
(j) No Obligation to Mitigate Damages. The Participants shall not be obligated to seek other employment in mitigation of amounts
payable or arrangements made under the provisions of the Program and the obtaining of any such other employment shall in no event
effect any reduction of the Companys or its Subsidiariesobligations under the Program.
(k) Forum. Any suit brought under the Program shall be brought in the federal court for Tarrant County, Texas.
(l) Condition Precedent to Receipt of Payments or Benefits under the Program. A Terminated Participant will not be eligible to receive
Severance Benefits or any other payments or benefits under the Program (other than Accrued Compensation) unless, prior to the 60th day
following such Terminated Participant's Termination Date, (i) such Terminated Participant executes a confidentiality, nonsolicitation and
general release agreement (the Agreement) containing, among other items, a general release of all claims arising out of said
Participants employment with, and termination of employment from, the Company or the subject Subsidiary in substantially the form
attached hereto as Exhibit A (adjusted as necessary to conform to then existing legal requirements); and (ii) the revocation period
specified in the Agreement expires without such Terminated Participant exercising his/her right of revocation as set forth in the
Agreement.
(m) Assumption by Successor to the Company. The Company shall cause any successor to its business or assets to assume this Program
and the obligations arising hereunder and to maintain this Program without modification or alteration for the period required herein.
9
BENEFITS SCHEDULE I
(CEO)
Participant Companys Chief Executive Officer
Severance Period (applicable during Retention
Period)
18 months, plus an additional 1 month per completed year of service with the
Company and/or its Subsidiaries, up to a maximum Severance Period of 24 months
Outplacement Assistance A 1 year program of outplacement assistance selected by the Company in its
discretion
Additional Definition
Good Reasonshall mean:
(a) any significant adverse reduction in the Participants annual cash compensation opportunity expressed in terms of base salary and
target annual bonus which is in effect immediately prior to the Effective Date (and as increased from time to time thereafter), except as
part of a general reduction in the total compensation opportunities of the Companys senior executives; for purposes of this definition of
Good Reason, a significant adverse reductionshall solely mean a reduction of the Participants annual cash compensation opportunity
by at least ten percent (10%) taken at one time or cumulatively after the Effective Date; or
(b) the material reduction or material adverse modification of the Participants authority or duties, such as a substantial diminution or
adverse modification in the Participants status or responsibilities, from his/her authorities being exercised and duties being performed by
the Participant immediately prior to the Effective Date (and as such authorities and duties may be increased from time to time after the
Effective Date).
Notwithstanding the foregoing, any of the circumstances described above may not serve as a basis for resignation for Good Reasonby
the Participant unless the Participant has provided written notice to the Company that such circumstance exists within thirty (30) days of
the Participants learning of such circumstance and the Company has failed to cure such circumstance within thirty (30) days following
such notice; and provided further, the Participant did not previously consent to the action leading to his/her claim of resignation for Good
Reason.
I1
Severance Benefits
If, during the Retention Period, Participants employment with the Company shall terminate under circumstances described in Section 5,
Participant shall receive the following Severance Benefits:
(a) The Company agrees to pay Participant a lump sum cash amount equal to the Participants base salary for the duration of the
Severance Period, determined using Participants base salary as of the Termination Date (disregarding any reduction constituting Good
Reason);
(b) The Company agrees to provide the Participant for 1 year (the Outplacement Period) from the Participants last date of
employment an outplacement program selected by the Company in its discretion; and
(c) The Company agrees to pay Participant a lump sum cash amount equal to the monthly premium under the Companys health and
welfare plans then in effect for coverage obtained thereunder pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (COBRA), multiplied by the number of months in the Outplacement Period, in lieu of continuing employee benefits and/or
perquisites. Said amount shall be paid regardless of whether Participant maintains COBRA coverage.
Payments and assistance relating to (a), (b) and (c) will be paid or begin on the 60th day following the Participants Termination Date;
provided that the assistance relating to (b) will be retroactive to the day following Participants Termination Date.
Each individual payment provided for under the Program is intended to be a separate payment and not a stream of payments for the
purposes of Code section 409A and are intended to be exempt from Code section 409A under the shortterm deferral and separation pay
plan exemption to the fullest extent possible. A termination of employment shall not be deemed to have occurred for purposes of any
provision of this Program providing for the payment of any amounts or benefits payable under this Program that is nonqualified deferred
compensation subject to Code section 409A (such amounts, together, the 09A Deferred Compensation Amounts), upon or following a
termination of employment unless such termination is also a separation from service,within the meaning of Code section 409A (a
Separation from Service).
Notwithstanding any provisions of the Program to the contrary, if the Participant is a specified employee(within the meaning of Code
section 409A and determined pursuant to any policies adopted by the Company consistent with Code section 409A), at the time of the
Participants Separation from Service and if any portion of the payments or benefits to be received by the Participant upon Separation
from Service would be considered deferred compensation under Code section 409A and cannot be paid or provided to the Participant
without the Participant incurring taxes, interest or penalties under Code section 409A, amounts that would otherwise be payable pursuant
to this Program and benefits that would otherwise be provided pursuant to this Program, in each case, during the sixmonth period
immediately
I2
following the Participants Separation from Service will instead be paid or made available on the earlier of (i) the first business day of the
seventh month following the date of the Participants Separation from Service or (ii) the Participants death.
In the event of death, all Severance Benefits (other than the value of outplacement assistance), that have become payable prior to the date
of death shall be paid to the Participants Beneficiary in accordance with the same schedule otherwise contemplated hereunder to the
extent the Severance Benefits constitute Section 409A Deferred Compensation.
Notwithstanding anything contained in the Program to the contrary, the Company shall pay all Accrued Compensation to a Terminated
Participant on the 30th day following the Termination Date; provided that any Accrued Compensation attributable to a plan, policy
practice, program, contract or agreement shall be paid in accordance with the terms thereof under which the amounts have accrued.
Notwithstanding anything contained in the Program to the contrary, the Company or the Committee may, in its sole discretion provide
benefits in addition to the benefits described under this Benefit Schedule, which benefits may, but are not required to be, uniform among
Participants, provided the benefits are paid pursuant to programs that are exempt from or comply with Code section 409A.
I3
BENEFITS SCHEDULE II
(Executive Vice President Group)
Participant Executive Vice Presidents of the
Company
Severance Period (applicable during
Retention Period)
18 months, plus an additional 1 month
per completed year of service with the
Company and/or its Subsidiaries, up to a
maximum Severance Period of 24
months
Outplacement Assistance A 1 year program of outplacement
assistance selected by the Company in its
discretion
Good Reasonshall mean:
(a) any significant adverse reduction in the Participants annual cash compensation opportunity expressed in terms of base salary and
target annual bonus which is in effect immediately prior to the Effective Date (and as increased from time to time thereafter), except as
part of a general reduction in the total compensation opportunities of the Companys senior executives; for purposes of this definition of
Good Reason, a significant adverse reductionshall solely mean a reduction of the Participants annual cash compensation opportunity
by at least ten percent (10%) taken at one time or cumulatively after the Effective Date; or
(b) the material reduction of the Participants authority or duties, such as a substantial diminution in the Participants status or
responsibilities, from his/her authorities being exercised and duties being performed by the Participant immediately prior to the Effective
Date (and as such authorities and duties may be increased due to promotions from time to time after the Effective Date).
Reason.
II1
Severance Benefits
Reason);
(b) The Company agrees to provide the Participant for 1 year (the Outplacement Period) from the Participants last date of
immediately
II2
following the Participants Separation from Service will instead be paid or made available on the earlier of (i) the first business day of the
seventh month following the date of the Participants Separation from Service or (ii) the Participants death.
II3
BENEFITS SCHEDULE III
(Senior Vice President Group)
Participant Senior Vice Presidents of the Company
Retention Period)
12 months, plus an additional 2 weeks
per completed year of service with the
maximum Severance Period of 18
months
Outplacement Assistance A 9 month program of outplacement
discretion
Good Reasonshall mean any significant adverse reduction in the Participants annual cash compensation opportunity expressed in
terms of base salary and target annual bonus which is in effect immediately prior to the Effective Date (and as increased from time to time
thereafter), except as part of a general reduction in the total compensation opportunities of the Companys senior executives; for purposes
of this definition of Good Reason, a significant adverse reductionshall solely mean a reduction to a position grade below the position
grade applicable to the Participant immediately prior to the Effective Date.
Reason.
Severance Benefits
Reason);
III1
(b) The Company agrees to provide the Participant for 9 months (the Outplacement Period) from the Participants last date of
immediately following the Participants Separation from Service will instead be paid or made available on the earlier of (i) the first
business day of the seventh month following the date of the Participants Separation from Service or (ii) the Participants death.
III2
III3
BENEFITS SCHEDULE IV
(Vice President Group, Assistant Secretary and Assistant Treasurer)
Participant Vice Presidents, Assistant Secretaries and
Assistant Treasurers of the Company
Retention Period)
6 months, plus an additional 2 weeks per
completed year of service with the
maximum Severance Period of 12 months
Outplacement Assistance A 6 month program of outplacement
discretion
Good Reasonshall mean any significant adverse reduction in the Participants annual cash compensation opportunity expressed in
terms of base salary and target annual bonus which is in effect immediately prior to the Effective Date (and as increased from time to time
thereafter), except as part of a general reduction in the total compensation opportunities of the Companys senior executives; for purposes
of this definition of Good Reason, a significant adverse reductionshall solely mean a reduction to a position grade below the position
grade applicable to the Participant immediately prior to the Effective Date.
Reason.
Severance Benefits
Reason);
IV1
(b) The Company agrees to provide the Participant for 6 months (the Outplacement Period) from the Participants last date of
immediately following the Participants Separation from Service will instead be paid or made available on the earlier of (i) the first
business day of the seventh month following the date of the Participants Separation from Service or (ii) the Participants death.
IV2
IV3
EXHIBIT A
FORM OF
CONFIDENTIALITY, NONSOLICITATION AND GENERAL RELEASE
AGREEMENT
This Confidentiality, Nonsolicitation and General Release Agreement (this Agreement), dated ___________, 20__ is between
RadioShack Corporation, a Delaware corporation (RadioShack), and _____________ (the Participant)(collectively the Parties).
NOW THEREFORE, for valuable consideration, the adequacy which is hereby acknowledged, the Parties agree as follows:
1. Separation of Employment with RadioShack.
a. Effective _______, 20__ (the Effective Date), Participant is terminated and separated from his/her position as
____________________________________________ of RadioShack, and Participant thereby relinquishes and resigns from all officer
and director positions, all other titles, and all authorities with respect to RadioShack or any affiliated entity of RadioShack and shall be
deemed terminated and separated from employment with RadioShack for all purposes. On the Effective Date, (i) Participants salary and
benefits from RadioShack shall cease to accrue, and he/she shall cease to be able to contribute to any employee benefit plans or programs,
and (ii) Participant will return to RadioShack all companyissued RadioShack property, including all Confidential Information described
in Section 3. below.
b. As consideration to Participant for this Agreement, RadioShack agrees to pay Participant severance payments and benefits in
accordance with the Applicable Benefits Schedule for Participant in the Second Amended and Restated RadioShack OfficersSeverance
Program (the Program); provided, however, Participant does not exercise his/her right of revocation under Section 6 hereof.
c. This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Program (the provisions
of which are incorporated herein by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Program.
2. Covenants Not to Solicit or Interfere.
a. During the period of time equal to the Severance Period (determined in accordance with the Applicable Benefits Schedule for
Participant (both as defined in the Program)) if and only if Participant has received or will receive severance payments and benefits under
the Program, Participant shall not, either directly or indirectly, within the United States of America or any country of the world in which
RadioShack sells, imports, exports, assembles, packages or furnishes its products, articles, parts, supplies, accessories or services or is
causing them to be sold, imported, exported, assembled, packaged or furnished through related entities, representatives, agents, or
otherwise:
A1
i. solicit or induce, or attempt to solicit or induce, any employee of RadioShack, current or future, to leave or cease their relationship
with RadioShack, for any reason whatsoever, or hire any current or future employee of RadioShack; or
ii. solicit or attempt to solicit RadioShacks existing or prospective customers to purchase services or products that are competitive with
those manufactured, designed, programmed, serviced, repaired, rented, marketed, offered for sale and/or under any stage of development
by RadioShack as of the date of Participants separation from RadioShack. For purposes of this Agreement, existing customers shall
mean those persons or firms that RadioShack has made a sale to in the twelve (12) months preceding Participants separation from
employment; and prospective customers shall mean those persons or firms whom RadioShack has solicited and/or negotiated to sell
RadioShacks products, articles, parts, supplies, accessories or services to within the twelve (12) months preceding Participants
separation from RadioShack.
b. Participant acknowledges that RadioShack conducts its business on an international level and has customers throughout the United
States and many other countries, and that the geographic restriction on solicitation is therefore fair and reasonable.
3. Confidential Information.
a. For purposes of this Agreement, Confidential Informationincludes any and all information and trade secrets, whether written or
otherwise, relating to RadioShacks business, property, products, services, operations, sales, prospects, research, customers, business
relationships, business plans and finances.
b. Participant acknowledges that while employed at RadioShack, Participant has had access to Confidential Information. Participant
further acknowledges that the Confidential Information is of great value to RadioShack and that its improper disclosure will cause
RadioShack to suffer damages, including loss of profits.
c. Participant shall not at any time or in any manner use, copy, disclose, divulge, transmit, convey, transfer or otherwise communicate
any Confidential Information to any person or entity, either directly or indirectly, without RadioShacks prior written consent.
d. Participant acknowledges that all of the information described in subsection (a) above is Confidential Information,which is the
sole and exclusive property of RadioShack. Participant acknowledges that all Confidential Information was revealed to Participant in
trust, based solely upon the confidential employment relationship then existing between RadioShack and Participant. Participant agrees:
(1) that all writings or other records concerning Confidential Information are the sole and exclusive property of RadioShack; (2) that all
manuals, forms, and supplies furnished to or used by Participant and all data or information placed thereon by Participant or any other
person are RadioShacks sole and exclusive property; (3) that, upon execution of this Agreement, or upon request of RadioShack at any
time, Participant shall deliver to RadioShack all such writings, records, forms, manuals, and supplies and all copies of such; (4) that
Participant will not make or retain any copies of such for his/her own or personal use, or take the originals or copies of such from the
offices of RadioShack; and (5) that Participant will
A2
not, at any time, publish, distribute, or deliver any such writing or records to any other person or entity, or disclose to any person or entity
the contents of such records or writings or any of the Confidential Information.
e. Participant acknowledges that he/she has not disclosed in the past, and agrees not to disclose in the future, to RadioShack any
confidential information or trade secrets of former employers or other entities Participant has been associated with.
4. NonDisparagement. Each of Participant and RadioShack (for purposes hereof, RadioShackshall mean only (i) RadioShack by
press release or other formally released announcement and (ii) the executive officers and directors thereof and not any other employees)
agrees not to make any public statements that disparage the other party, or in the case of RadioShack, its respective affiliates, employees,
officers, directors, products, articles, parts, supplies, accessories or services. Notwithstanding the foregoing, statements made in the
course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with
such proceedings) shall not be subject to this Section 3.
5. Injunctive Relief; Damages. Participant acknowledges that any breach of this Agreement will cause irreparable injury to RadioShack
and that money damages alone would be inadequate to compensate it. Upon a breach or threatened breach by Participant of any of this
Agreement, RadioShack shall be entitled to a temporary restraining order, preliminary injunction, permanent injunction or other relief
restraining Participant from such breach without posting a bond. Nothing herein shall be construed as prohibiting RadioShack from
pursuing any other remedies for such breach or threatened breach, including recovery of damages from Participant.
6. General Release
a. The Participant, for himself/herself, his/her spouse, heirs, administrators, children, representatives, executors, successors, assigns,
and all other persons claiming through Participant, if any (collectively, Releasers), knowingly and voluntarily releases and forever
discharges RadioShack, its affiliates, subsidiaries, divisions, successors and assigns and the current, future and former employees, officers,
directors, trustees and agents thereof, from any and all claims, causes of action, demands, fees and liabilities of any kind whatsoever,
whether known and unknown, against RadioShack, that Participant has, has ever had or may have as of the date of execution of this
Agreement, including, but not limited to, any alleged violation of:
The National Labor Relations Act, as amended;
Title VII of the Civil Rights Act of 1964, as amended;
The Civil Rights Act of 1991;
Sections 1981 through 1988 of Title 42 of the United States Code, as amended;
The Employee Retirement Income Security Act of 1974, as amended;
A3
The Immigration Reform and Control Act, as amended;
The Americans with Disabilities Act of 1990, as amended;
The Age Discrimination in Employment Act of 1967, as amended;
The Older Workers Benefit Protection Act of 1990;
The Worker Adjustment and Retraining Notification Act, as amended;
The Occupational Safety and Health Act, as amended;
The Family and Medical Leave Act of 1993;
The Equal Pay Act;
The Texas Labor Code;
The Texas Commission on Human Rights Act;
The Texas Pay Day Act;
Chapter 38 of the Texas Civil Practices and Remedies Code;
Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance;
Any provisions of the State of Texas or Federal Constitutions; or
Any public policy, contract, tort, or common law.
Notwithstanding anything herein to the contrary, this Agreement shall not apply to: (i) Participants rights of indemnification and
directorsand officersliability insurance coverage to which he/she was entitled immediately prior to the effective date hereof with
regard to his/her service as an officer of RadioShack; (ii) Participants rights under any taxqualified pension, claims for accrued vested
benefits under any other employee benefit plan, policy or arrangement maintained by RadioShack or under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and benefits which must be provided to Participant pursuant to the terms of any
employee benefit plan of RadioShack; (iii) Participants rights under the provisions of the Program which are intended to survive
termination of employment; or (iv) Participants rights as a stockholder. Excluded from this Agreement are any claims which cannot be
waived by law.
b. Participant acknowledges and recites that:
(i) Participant has executed this Agreement knowingly and voluntarily;
(ii) Participant has read and understands this Agreement in its entirety, including the waiver of rights under the Age Discrimination
in Employment Act;
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(iii) Participant has been advised and directed orally and in writing (and this subparagraph (c) constitutes such written direction) to
seek legal counsel and any other advice he/she wishes with respect to the terms of this Agreement before executing it;
(iv) Participant has sought such counsel, or freely and voluntarily waives the right to consult with counsel, and Participant has had
an opportunity, if he/she so desires, to discuss with counsel the terms of this Agreement and their meaning;
(v) Participant enters into this Agreement knowingly and voluntarily, without duress or reservation of any kind, and after having
given the matter full and careful consideration; and
(vi) Participant has been offered 21 calendar days after receipt of this Agreement to consider its terms before executing it. If
Participant has not executed this Agreement within 21 days after receipt, this Agreement shall be unenforceable and null and void.
c. Participant shall have 7 days from the date hereof to revoke this Agreement by providing written notice of the revocation as set
forth in Section 5, below, in which event this Agreement shall be unenforceable and null and void.
d. 21 DAYS TO SIGN; 7DAY REVOCATION PERIOD. PARTICIPANT UNDERSTANDS THAT HE/SHE MAY TAKE UP
TO 21 CALENDAR DAYS FROM THE DATE OF RECEIPT OF THIS AGREEMENT TO CONSIDER THIS AGREEMENT BEFORE
SIGNING IT. FULLY UNDERSTANDING PARTICIPANTS RIGHT TO TAKE 21 DAYS TO CONSIDER SIGNING THIS
AGREEMENT, AND AFTER HAVING SUFFICIENT TIME TO CONSIDER PARTICIPANTS OPTIONS, PARTICIPANT HEREBY
WAIVES HIS/HER RIGHT TO TAKE THE FULL 21 DAY PERIOD. PARTICIPANT FURTHER UNDERSTANDS THAT HE/SHE
MAY REVOKE THIS AGREEMENT AT ANY TIME DURING THE SEVEN (7) CALENDAR DAYS AFTER SIGNING IT, AND
THAT THIS AGREEMENT SHALL NOT BECOME BINDING UNTIL THE SEVEN (7) DAY REVOCATION PERIOD HAS
PASSED.
e. To revoke this Agreement, Participant must send a written statement of revocation to:
RadioShack Corporation
MS CF5121
300 RadioShack Circle
Fort Worth, TX 76102
Attn: Vice PresidentHuman Resources
The revocation must be received no later than 5:00 p.m. on the seventh day following Participants execution of this Agreement.
7. Cooperation. Participant agrees to cooperate with RadioShack, and its financial and legal advisors, and/or government officials, in
any claims, investigations, administrative proceedings, lawsuits, and other legal, internal or business matters, as reasonably requested by
RadioShack. Also, to the extent Participant incurs travel or other expenses with respect to such
A5
activities, RadioShack will reimburse his/her for such reasonable expenses documented and approved in accordance with RadioShacks
then current travel policy.
8. No Admission. This Agreement shall not in any way be construed as an admission by RadioShack of any act of discrimination or
other unlawful act whatsoever against Participant or any other person, and RadioShack specifically disclaims any liability to or
discrimination against Participant or any other person on the part of itself, its employees, or its agents.
9. Severability. It is the desire and intent of the Parties that the provisions of this Agreement shall be enforced to the fullest extent
permissible. Accordingly, if any provision of this Agreement shall prove to be invalid or unenforceable, the remainder of this Agreement
shall not be affected, and in lieu, a provision as similar in terms as possible shall be added.
10. Entire Agreement. This Agreement, together with the documents incorporated herein by reference, represents the entire agreement
between the parties with respect to the subject matter hereof and this Agreement may not be modified by any oral or written agreement
unless same is in writing and signed by both parties.
11. Governing Law. This Agreement shall be governed by the internal laws (and not the choice of law principles) of the State of Texas,
except for the application of preemptive federal law.
12. Survival. Participants obligations under this Agreement shall survive the termination of Participants employment and shall
thereafter be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of
any contract or of any other duty owed to Participant.
13. Amendments; Waiver. This Agreement may not be altered or amended, and no right hereunder may be waived, except by an
instrument executed by each of the Parties.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first above written.
RADIOSHACK:
RadioShack Corporation, for itself and its subsidiaries
By: _________________________________
Its: _________________________________
PARTICIPANT:
______________________________________
Name: ____________________________________
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Exhibit 10.55
AGREEMENT
This Agreement is between RadioShack Corporation, a Delaware corporation (the Company), and James F. Gooch (the Executive)
(collectively, the Partiesand each a Party).
RECITALS
A. The Executive is currently employed by the Company as an atwill employee pursuant to the employment offer letter to the
Executive from the Company, dated July 27, 2006 (the Offer Letter).
B. The Parties previously entered into the Second Amended and Restated Termination Protection Agreement for Corporate
Executives, effective as of December 31, 2010 (the Termination Protection Agreement).
C. The Executive is a participant in the Second Amended and Restated RadioShack Corporation OfficersSeverance Program,
dated as of December 31, 2010 (the Severance Program).
D. The Board of Directors of the Company (the Board) has resolved to elect the Executive as the Companys Chief Executive
Officer (CEO) and a member of the Board effective immediately after the Companys 2011 annual meeting of stockholders (the date
of such meeting, the Effective Date), and as President of the Company (President) effective as of the date of the execution of this
Agreement. In connection therewith, the Parties desire to enter into this Agreement to set forth the terms to which the Parties have agreed
in respect of the Executives service as CEO, President and a member of the Board.
NOW THEREFORE, the Parties agree as follows:
1. Employment. (a) On the Effective Date, the Executive will continue to serve as President and will commence serving as CEO of the
Company. In connection therewith, the Executive will report directly to the Board, and have duties, responsibilities and authority
commensurate with the Executives title and position. The Executive will also serve as an officer of any Subsidiary or Affiliate of the
Company as may be requested from time to time by the Board on the terms and conditions set forth herein without any additional
compensation.
(b) The employment relationship between the Company and the Executive will be governed by the written general employment policies
and practices of the Company applicable to senior executives generally, including, without limitation, those relating to ethics and business
conduct, confidential information and avoidance of conflicts except that, when any express term of this Agreement differs from or is in
conflict with the Companys general employment policies or practices, such term of this Agreement will control.
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(c) So long as such activities do not involve a breach of Sections 4, 5, 6 or 7 and do not interfere with the performance of his duties
hereunder, from and after the Effective Date, the Executive may, consistent with Company policies otherwise applicable thereto,
participate in any governmental, educational, charitable or other community affairs and, subject to the prior approval of the Board in the
Boards sole discretion, serve as a member of the governing board of any such organization during the period following the Effective
Date in which he is employed by the Company Group (the Term). The Executive may retain all fees and other compensation from any
such service, and the Company will not reduce the Executives compensation by the amount of such fees. The Executive may not accept
any position during the Term with a forprofit enterprise without the prior approval of the Board in the Boards sole discretion.
(d) The Executives employment will be atwill; provided, however, that nothing in this Section 1(d) will affect the Executives rights
to compensation, benefits and severance herein provided.
2. Compensation. (a) Base Salary. The Executives base salary for 2011 (effective as of the date of execution of this Agreement) will
be $850,000 per annum (the Base Salary), which Base Salary will be payable at the times and in the manner consistent with the
Companys policies regarding compensation of the Companys senior executives generally. The Board will fix the Executives Base
Salary for any subsequent period during the Term and any increased amount of Base Salary will be treated as the Base Salary under this
Agreement; provided that the Base Salary will not be decreased.
(b) Incentive Compensation. The Executive will be eligible during the Term to participate in any management incentive plans,
programs or arrangements of the Company that are available to the Companys senior executives generally. Incentive compensation will
be paid in accordance with the terms and conditions of the applicable plans, programs and arrangements. Without limiting the generality
or effect of the foregoing:
(i) Annual Performance Bonus Awards. During the Term, the Executive will be eligible for an annual cash bonus award (the
Bonus Award) on a basis no less favorable than Bonus Awards made to the Companys senior executives generally; provided that the
Bonus Award payable to the Executive upon achievement of the target performance level for 2011 will be equal to 120% of the Base
Salary (the Target Bonus) (with a Bonus Award opportunity range between 25% of the Target Bonus and 200% of the Target
Bonus). The Executives Bonus Award for each calendar year will be paid, if payable pursuant to the terms of the applicable plan or
agreement, to the Executive as soon as reasonably practicable following the end of such year and at the same time during the immediately
following year that the Companys senior executives generally receive Bonus Award payments for the preceding year; provided that such
payment will not be made later than March 15th of the immediately following year. The Target Bonus is subject to change during the
Term; provided that the Target Bonus opportunity may not be less than 120% of the Base Salary.
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(ii) Annual LongTerm Incentive Awards. During the Term, the Executive will be eligible for annual and/or longterm incentive equity
and cashbased awards (each, an LTI Award) at the time that LTI Awards are made by the Company to the Companys senior
executives generally, and on a basis that in the aggregate are no less favorable than LTI Awards made to the Companys senior executives
generally, including, without limitation, with respect to the mix of forms of LTI Awards (i.e., performance cash based awards, stock
options, restricted stock, etc.). Notwithstanding the foregoing, the Executives equitybased LTI Award for 2011 will be made at the
same time as 2011 longterm incentive awards are made to the Companys senior executives generally and will have a fair value on the
date of grant equal to $2 million, except that in no event will the number of shares of the Companys common stock subject to an LTI
Award exceed the per person maximum and/or the per award limitation set forth in the applicable plan pursuant to which the LTI Award is
granted. Each of the Executives LTI Awards will be subject to additional terms and conditions as set forth in the agreement evidencing
the grant of such award; provided that such terms and conditions are no less favorable than those applicable to the Companys senior
executives generally.
(c) Promotional LTI Award. In addition to any LTI Awards described in Section 2(b)(ii), on the first business day following the
Effective Date on which the Company and the Executive are not subject to a blackout restriction (the Promotional Grant Date), the
Company will make a onetime grant to the Executive of an option to acquire shares of the Companys common stock under the Equity
Plan (the Promotional LTI Award). The Promotional LTI Award will have a fair value on the Promotional Grant Date equal to $2
million, and the per share exercise price of the Promotional LTI Award will be equal to the Fair Market Value (as such term is defined in
the Equity Plan) on the Promotional Grant Date. The award agreement evidencing the grant of the Promotional LTI Award will be
substantially in the form attached hereto as Exhibit A.
(d) Benefits. During the Term, subject to the terms and conditions of the applicable plans, the Executive and, if permitted by the
applicable plan, his eligible dependents, will be participants in the Companysponsored group health, medical, dental, vision, life
insurance, pension and profit sharing, 401(k) and employee welfare benefit plans (the Employee Plans), and will receive such other
benefits which senior executives of the Company generally receive from time to time on terms no less favorable to the Executive than
those applicable to senior executives of the Company generally. The Executive acknowledges that the Company may change its benefit
programs from time to time, which may result in certain benefit programs being amended or terminated; provided that the Executive will
be treated no less favorably than senior executives of the Company generally in the event of any such changes.
3
(e) Expenses. The Company will pay or reimburse the Executive for reasonable and necessary business expenses incurred by the
Executive in connection with his duties on behalf of the Company in accordance with the Companys travel and expense policy, as may
be amended from time to time, or any successor policy applicable to senior executives of the Company, following submission by the
Executive of reimbursement expense forms in a form consistent with such expense policies; provided that any such reimbursements
comply with the Reimbursement Rules.
(f) Change in Control. Notwithstanding anything contained in this Agreement to the contrary, upon the occurrence of a Change in
Control, all of the Executives outstanding equity awards as of the date of the Change in Control (including, without limitation, stock
options, stock appreciation rights, restricted stock and restricted stock units) will immediately and fully vest and become
nonforfeitable. Such awards will be settled in accordance with the terms of the applicable equity incentive plan and/or the applicable
award agreement.
3. Termination of Employment. (a) Termination by the Company for Cause or Resignation by the Executive Without Good Reason. If,
during the Term, the Executives employment is terminated by the Company for Cause or if the Executive resigns without Good Reason,
the Executive will not be eligible to receive the Base Salary or to participate in any Employee Plans with respect to future periods after the
date of such termination or resignation, except for the right to receive: (i) accrued but unpaid Base Salary through the date of termination
of employment, to be paid in accordance with the Companys normal payroll practices; (ii) payment for accrued but unused vacation
through the date of termination of employment, to be paid within 30 days following the date of termination of employment; (iii) any
unreimbursed business expenses incurred by the Executive prior to the date of termination, to be paid in accordance with Section 2(e); (iv)
benefits payable to the Executive under the terms of the Companys plans in which the Executive participated prior to the date of his
termination of employment, including, without limitation, the Employee Plans (to be paid in accordance with the terms thereof), but
excluding (A) the Severance Program (or any successor thereto or similar plan or program) and (B) the Termination Protection Agreement
(or any successor thereto or similar agreement); and (v) the Bonus Award, if any, with respect to any completed fiscal year which has not
yet been paid to the Executive as of the date of termination of employment, to be paid when such bonuses are paid to senior executives of
the Company generally, but in no event later than March 15th of the year immediately following the year to which such bonus relates
(clauses (i) through (v) of this Section 3(a), together, the Accrued Compensation and Benefits).
(b) Termination by the Company Without Cause or Resignation by the Executive for Good Reason. If, during the Term, the
Executives employment is terminated by the Company without Cause (other than due to the Executives death or Disability) or the
Executive terminates employment for Good Reason (in either case, a Qualifying Termination), the Executive will be entitled to receive
from the Company, the following:
4
(i) The Accrued Compensation and Benefits;
(ii) A lump sum cash payment of a pro rata portion of the Bonus Award and any cashbased LTI Awards (the Cash LTI Awards) that
the Executive would have been entitled to receive for the performance period in which the Executives date of termination of employment
occurs, based upon the percentage of the performance period that elapsed through the Executives date of termination of employment
(determined by dividing (A) the number of days the Executive was employed during the applicable performance period through the
Executives date of termination of employment by (B) the total number of days in the applicable performance period (with respect to the
Bonus Award, not to exceed 365 days)) and based on the Executives, the Companys and its Subsidiariesand Affiliates, as
applicable, actual results for the applicable performance period through the nearest end of the month preceding or succeeding the
Executives date of termination of employment (the Adjusted Performance Period), based on the good faith determination by the
Board (or a duly authorized committee thereof) of the achievement of the applicable performance goals; provided that the applicable
performance goals will be adjusted in good faith by the Board (or a duly authorized committee thereof) to reflect only the performance
goals applicable to the Adjusted Performance Period;
(iii) A lump sum cash payment equal to the sum of (A) 200% of the Base Salary as in effect immediately prior to the Qualifying
Termination (which will be the Base Salary prior to reduction if the termination is for Good Reason because of a reduction in the Base
Salary), plus (B) 200% of the Target Bonus as in effect immediately prior to the Qualifying Termination (which will be the Target Bonus
prior to reduction if the termination is for Good Reason because of a reduction in the Target Bonus);
(iv) A lump sum cash payment equal to the product of (A) 24 multiplied by (B) the COBRA Amount; and
(v) Notwithstanding the terms of any equity agreement, all of the Executives outstanding timevested equity awards (including,
without limitation, timevested stock options and stock appreciation rights, timevested restricted stock and timevested restricted stock
units) that would otherwise have vested within two years following the Executives termination of employment (if the Executive had
remained employed by the Company) will fully vest and become nonforfeitable, with (A) any such outstanding timevested stock
options and stock appreciation rights also becoming fully exercisable (and with all such stock options and stock appreciation rights
remaining exercisable for at least 12 months following the Executives termination of employment (but in no event later than the date of
expiration of the original term of such award)); and (B) the timebased restriction period on any such restricted stock and any such
restricted stock units held by the Executive will lapse and any other timevesting requirements or conditions with respect to the foregoing
or other such timevested equitybased awards held by the Executive will lapse and be disregarded, and all equity awards accelerated
pursuant to this paragraph will be settled in accordance with the terms of the applicable equity incentive plan and/or the applicable award
agreement; provided, however, in no event will the Promotional LTI Award be subject to acceleration pursuant to this paragraph in the
case of a Qualifying Termination unless such termination of employment is also a Change in Control Termination, as defined in Section
3(d) below (all acceleration pursuant to this Section 3(b)(v), together, the Equity Acceleration).
5
(c) Termination by Death or Disability. If the Executive dies during the Term, his employment will terminate automatically effective
upon his death. If the Executive becomes Disabled during the Term, his employment will terminate effective on the Disability Effective
Date. In either case, the Executive (or, if applicable, the Executives beneficiary (or, if none, the Executives estate)) will be entitled to
receive from the Company, the following:
(ii) A lump sum cash payment of a pro rata portion of the Target Bonus and the target amount of any Cash LTI Awards with respect to
the performance period in which the Executives date of termination of employment occurs, based upon the percentage of the
performance period that elapsed through the Executives date of termination of employment (determined by dividing (A) the number of
days the Executive was employed during the applicable performance period through the Executives date of termination of employment
by (B) the total number of days in the applicable performance period (with respect to the Bonus Award, not to exceed 365 days)) (the
Pro Rata Target Cash Awards);
(iii) A lump sum cash payment equal to the product of (A) 24 multiplied by (B) the COBRA Amount; provided that, if the Executives
employment terminated due to the Executives death, the COBRA Amount will be calculated only with respect to the Executives spouse
and/or eligible dependents; and
(iv) The Equity Acceleration, and accelerated vesting of the unvested portion, if any, of the Promotional LTI Award (and the period
during which the Promotional LTI Award shall remain exercisable) as set forth in Exhibit A.
(d) Qualifying Termination in Connection with a Change in Control. If, during the Term, the Executives employment is terminated by
reason of a Qualifying Termination (1) within two years following a Change in Control or (2) during a Protection Period (any such
termination of employment, a Change in Control Termination), then the Executive will be entitled to receive from the Company, in lieu
of the payments and benefits set forth in Section 3(b), the following:
6
(ii) The Pro Rata Target Cash Awards;
(iii) A lump sum cash payment equal to the sum of (A) 300% of the Base Salary as in effect immediately prior to the Qualifying
Termination (which will be the Base Salary prior to reduction if the termination is for Good Reason because of a reduction in the Base
Salary), plus (B) 300% of the Target Bonus as in effect immediately prior to the Qualifying Termination (which will be the Target Bonus
prior to reduction if the termination is for Good Reason because of a reduction in the Target Bonus);
(iv) A lump sum cash payment equal to the product of (A) 36 multiplied by (B) the COBRA Amount; and
(v) (A) The Equity Acceleration; and (B) in the event the Executives employment is terminated by reason of a Qualifying Termination
during a Protection Period and prior to the occurrence of a Change in Control, all of the Executives outstanding equity awards
(including, without limitation, stock options, stock appreciation rights, restricted stock, restricted stock units and the Promotional LTI
Award) will immediately and fully vest and become nonforfeitable, with all such stock options and stock appreciation rights remaining
exercisable for at least 12 months following the Executives termination of employment (but in no event later than the date of expiration
of the original term of such award); provided that all awards accelerated pursuant to this Section 3(d)(v)(B) will be settled in accordance
with the terms of the applicable equity incentive plan and/or the applicable award agreement.
(e) Release; Payment Timing. If the Company delivers to the Executive an executed mutual general waiver and release of claims
substantially in the form attached hereto as Exhibit B (the Release) within seven days following the date of the Executives termination
of employment, then any obligation of the Company to make any payment pursuant to Section 3(b) or Section 3(c), other than payment of
Accrued Compensation and Benefits, and in the case of payments under Section 3(c), other than payments to be made thereunder upon
termination of employment due to the Executives death, will be conditioned upon the Executive first delivering to the Company a
fullyexecuted Release within 30 days after the date of the Executives termination of employment, and such Release becoming
irrevocable immediately following the end of the sevenday revocation period therein (the day on which the Release becomes irrevocable,
the Release Effective Date). Subject to the foregoing, except as otherwise specified in this Agreement, all payments and benefits to be
paid or provided pursuant to Sections 3(b), (c) or (d) on account of termination of the Executives employment (other than the Accrued
Compensation and Benefits, which shall be paid or provided as specified in Section 3(a)) will be paid or provided on the 38th day
following the date of termination of the Executives employment, with any Equity Acceleration (including, if applicable, acceleration of
the Promotional LTI Award) occurring on the Release Effective Date (or, if an executed and required Release is not delivered by the
Company to the Executive within seven days following the Executives termination of employment, on the 8th day following the
Executives termination of employment); provided that any equitybased award required (or permitted) to be settled in cash will be based
on the value of the applicable equity award on the date on which the Executives employment terminates.
7
(f) No Mitigation Obligation. Other than as provided in this Section 3, no amounts paid under this Section 3 will be reduced by any
earnings or other payments that the Executive may receive from any other source. The obligation of the Company to make any payments
under this Agreement will not be affected or offset by any amounts owed by the Executive to the Company or by any claims the Company
may have against the Executive.
(g) Forfeiture. Notwithstanding the foregoing, any right of the Executive to receive termination payments and benefits hereunder (other
than Accrued Compensation and Benefits) will be forfeited if the Executive materially breaches Section 4, 5, 6, 7 or 9; provided that,
before invoking this Section 3(g), the Company will provide the Executive with reasonable time (not to exceed 30 days) to respond to
such asserted breach by the Executive and, to the extent curable, a right to cure such breach within such time.
(h) Resignation from Certain Positions. Following the Term or the termination of the Executives employment for any reason, if and to
the extent requested by the Board, the Executive agrees to resign from the Board, all fiduciary positions (including, without limitation, as
trustee) and from all other offices and positions he holds with the Company and any of its Subsidiaries or Affiliates; provided, however,
that if the Executive refuses to tender his resignation after the Board has made such request, then the Board will be empowered to tender
the Executives resignation or remove the Executive from such offices and positions.
4. Confidential Information; Statements to Third Parties. (a) During the Term, other than in connection with the performance of his
duties for the Company Group (as defined below), and on a permanent basis upon and following any termination of the Executives
employment:
(i) All information, whether or not reduced to writing (or in a form from which information can be obtained, translated or derived into
reasonably usable form) and whether compiled or created by the Company, any of its Subsidiaries or Affiliates, or any of their respective
current or former parents (collectively, the Company Group), which derives independent economic value from not being readily known
to or ascertainable by proper means by others who can obtain economic value from the disclosure or use of such information, of a
proprietary, private, secret or confidential nature (including, without limitation, inventions, products, processes, methods, techniques,
formulas, compositions, compounds, projects, developments, sales strategies, plans, research data, clinical data, financial data, personnel
data, computer programs, customer and supplier lists, trademarks, service marks, copyrights (whether registered or unregistered), artwork,
and contacts at or knowledge of customers or prospective customers) concerning the Company Groups business, business relationships
or financial affairs (collectively, Proprietary Information) is the exclusive property of the Company Group;
8
(ii) Such Proprietary Information is and will remain the sole property of the Company Group; and
(iii) Any intentional or reckless retention or use by the Executive of Proprietary Information after the termination of the Executives
employment will constitute a misappropriation of the Company Groups Proprietary Information.
(b) During the Term, the Company promises to provide the Executive with access to Proprietary Information that the Executive has not
previously received, and to which the Executive has not previously had access. In exchange, the Executive promises to take all
affirmative steps reasonably necessary or required by the Company to protect the Proprietary Information from inappropriate disclosure
during and after his employment with the Company.
(c) All files, letters, memoranda, reports, records, data, sketches, drawings, laboratory notebooks, program listings or other written,
photographic, electronic or other tangible material containing or constituting Proprietary Information, whether created by the Executive or
others, which come into or be in the Executives custody or possession, regardless of medium, are the exclusive property of the Company
Group to be used by the Executive only in the performance of his duties under this Agreement. All such materials or copies thereof and
all tangible things and other property of the Company Group in the Executives custody or possession will be delivered to the Company
(to the extent the Executive has not already returned them) in good condition within five days after the Executive's date of termination of
employment with the Company. After such delivery, the Executive will not retain any such materials or portions or copies thereof or any
such tangible things and other property and will execute any statements or affirmations of compliance under oath that the Company may
require. The Executive will be entitled to retain personal items (including personal calendars and rolodexes, correspondence and personal
diaries) and any information related to the Executives compensation or equity awards, or that the Executive reasonably determines may
be needed for tax purposes, subject to the Executives continued compliance with the provisions of this Section 4 relating to the
preservation of Proprietary Information.
9
(d) The Executive's obligation not to disclose or to use information and materials of the types set forth in Sections 4(a), (b) and (c), and
his obligation to return materials and tangible property, set forth in Section 4(c), also extends to such types of information, materials and
tangible property of customers of the Company Group, consultants for the Company Group, suppliers to the Company Group and other
third parties who may have disclosed or entrusted the same to the Company Group or to the Executive.
(e) The Executive will continue to keep in strict confidence, and will not, directly or indirectly, at any time, disclose, furnish,
disseminate, make available, use or suffer to be used in any manner any Proprietary Information of the Company Group without limitation
as to when or how the Executive may have acquired such Proprietary Information and that he will not disclose any Proprietary
Information to any person or entity other than appropriate employees of the Company or use the same for any purposes (other than in the
performance of his duties as an employee of the Company) without specific approval of the Board, either during or after his employment
with the Company.
(f) The Executive's obligation of confidentiality will survive, regardless of any other breach of this Agreement or any other agreement,
by any Party, until and unless such Proprietary Information of the Company Group has become, through no fault of the Executive,
generally known to the public. For purposes of this Section 4, generally knownmeans known throughout the domestic U.S. industry or
the appropriate foreign countrys or countriesindustry. In the event that the Executive is required by law, regulation, governmental
investigation or court order or subpoena to disclose any of the Company Groups Proprietary Information, the Executive will promptly
notify the Company prior to making any such disclosure to facilitate the Company seeking a protective order or other appropriate remedy
from the proper authority at its sole cost and expense. The Executive further agrees to cooperate with the Company from and after the
Effective Date in seeking such order or other remedy and that, if the Company is not successful in precluding the requesting legal body or
organization from requiring the disclosure of the Proprietary Information, the Executive will furnish only that portion of the Proprietary
Information that is legally required, and the Executive will exercise all reasonable legal efforts to obtain reliable assurances that
confidential treatment will be accorded to the Proprietary Information. In addition, the Executive will be entitled to disclose or retain
Proprietary Information if necessary to enforce or defend the terms of this Agreement or any other agreement he maintains with the
Company or to defend himself in connection with any lawsuits relating to his position with the Company or any of its Subsidiaries or
Affiliates.
(g) The Executive acknowledges that a violation of the foregoing provisions of this Section 4 could cause irreparable harm to the
Company and that the Companys remedy at law for any such violation would be inadequate. In recognition of the foregoing, in addition
to any other relief afforded by law or this Agreement, including, without limitation, damages sustained by a breach of this Agreement and
any forfeitures under Section 3(g), and without the necessity or proof of actual damages or the posting of a bond, the Company will have
the right to enforce this Agreement by specific equitable remedies, which will include, without limitation, temporary and permanent
injunctions, it being the understanding of the Parties that damages, the forfeitures described above and injunctions will all be proper
modes of relief and are not to be considered as alternative remedies.
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5. NonCompetition. In exchange for, and ancillary to, the Companys promise to provide new Proprietary Information to the Executive
during the Term, and the Executives agreement not to use or disclose any such information to, or for the benefit of, anyone other than the
Company Group at any time, the Executive will not, without the prior express authorization of the Board, and for a period commencing on
the Effective Date and ending on the expiration of the Restricted Period, directly or indirectly, individually or on behalf of any other
Person do or suffer any of the following:
(a) Enter into or engage in any Competitive Business within the Restricted Territory, whether as an owner, investor, executive, manager,
employee, independent consultant, contractor, advisor or otherwise, except that the Executives ownership of less than 5% of any class of
stock in a publicly traded corporation will not be a breach of this covenant; or
(b) Promote or assist (other than as an ordinary consumer), financially or otherwise, any person, firm, association, partnership,
corporation or other entity engaged in any Competitive Business within the Restricted Territory, except that the Executives ownership of
less than 5% of any class of stock in a publicly traded corporation will not be a breach of this covenant.
The Executive will not be treated as violating this Section 5 if any entity with which the Executive is affiliated engages in such activities
and the Executive has no direct or indirect involvement in such activities. If a court at any time determines that any restriction or
limitation in this Section 5 is unreasonable or unenforceable, such restriction or limitation will be deemed amended so as to provide the
maximum protection to the Company Group and be deemed reasonable and enforceable by the court.
6. NonSolicitation. In exchange for, and ancillary to, the Companys promise to provide new Proprietary Information to the Executive
during the Term, and the Executives agreement not to use or disclose any such information to, or for the benefit of, anyone other than the
Company Group at any time, the Executive will not, without the prior express authorization of the Board, and for a period commencing on
the Effective Date (except with respect to Section 6(d) below) and ending on the expiration of the Restricted Period, directly or indirectly,
individually or on behalf of any other Person do or suffer any of the following:
(a) Hire or employ or assist in hiring or employing any individual who was, at any time during the last 180 days of the Executives
employment with the Company Group, an employee of any member of the Company Group or an independent contractor who provided
services primarily to any member of the Company Group (a Consultant); or solicit, aid, induce or persuade, or attempt to solicit, aid,
induce or persuade, directly or indirectly, any person who is an employee of any member of the Company Group, or a Consultant, to leave
his or her employment or position with any member of the Company Group to accept employment or a position with any other Person;
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(b) Induce any person who is an employee, officer or consultant of the Company Group to terminate such relationship;
(c) Solicit any customer (including such customers parent, Subsidiaries and Affiliates) of the Company Group from whom the
Company Group generated, or is reasonably expected to generate, gross annual revenues in excess of 2.5% of the Company Groups
aggregate gross annual revenues for the fiscal year during which the Executive engages in such conduct (a Customer), or any Person
whose business the Company Group had solicited in writing and who is reasonably expected to become a Customer in such fiscal year or
the following fiscal year (a Potential Customer) during the 180day period prior to the date of termination of the Executives
employment, for purposes of engaging in a Competitive Business within the Restricted Territory; provided that, in the case of a Potential
Customer, the Company Group received an indication of interest from the Potential Customer prior to solicitation by the Executive; or
(d) During the Restricted Period, solicit, aid, induce, persuade or attempt to solicit, aid, induce or persuade any Person to take any action
that would result in a Change in Control or to seek to control the Board in any manner (other than solely to enforce the Executives rights
hereunder or in the ordinary course of performing his duties).
For purposes of this Section 6, the terms solicitand persuadeinclude, without limitation: (i) initiating communications with an
employee of the Company Group relating to possible employment; (ii) offering bonuses or additional compensation to encourage an
employee of the Company Group to terminate his or her employment; and (iii) referring employees of the Company Group to personnel or
agents employed by competitors, suppliers or customers of the Company Group. Notwithstanding the foregoing, the following will not be
a violation of this Section 6: (A) the Executive responding to an unsolicited request for advice on employment or business matters,
provided that such advice does not relate in any way to the Company Group; (B) subject to any applicable Company Group policies, the
Executive responding to an unsolicited request for an employment reference by providing a reference setting forth his personal views
about such person; (C) any entity with which the Executive is affiliated engaging in or soliciting an employee of the Company Group, a
Customer or a Potential Customer, provided that the Executive was not directly or indirectly involved in such activity; or (D) the
Executive conducting a solicitation through an advertisement that is not specifically targeted at employees of the Company Group or
Customers.
7. Developments. (a) The Executive will make full and prompt disclosure to the Company of all inventions, improvements, discoveries,
methods, developments, software, mask works and works of authorship, whether patentable or copyrightable or not, (i) which relate to the
business of the Company Group and have heretofore been created, made, conceived or reduced to practice by the Executive or under his
direction or jointly with others, and not assigned to prior employers, or (ii) which have utility in or relate to the Company Groups
business and are created, made, conceived or reduced to practice by the Executive or under his direction or jointly with others during his
employment with the Company Group, whether or not during normal working hours or on the premises of the Company Group (all of the
foregoing of which are collectively referred to in this Agreement as Developments).
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(b) The Executive agrees to assign, and hereby does assign, to the Company (or any Person designated in writing by the Company) all of
the Executives rights, title and interest worldwide in and to all Developments and all related patents, patent applications, copyrights and
copyright applications, and any other applications for registration of a proprietary right. This Section 7(b) will not apply to Developments
that the Executive developed entirely on his own time without using the Company Groups equipment, supplies, facilities or Proprietary
Information and that do not, at the time of conception or reduction to practice, have utility in or relate to the business of the Company
Group, or actual or demonstrably anticipated research or development. To the extent this Agreement is construed in accordance with the
laws of any jurisdiction which precludes a requirement in an employee agreement to assign certain classes of inventions made by an
employee, this Section 7(b) will be interpreted not to apply to any invention which a court rules, or the Company agrees, falls within such
classes, but will be interpreted to apply thereto to the maximum extent legally permissible.
(c) The Executive will cooperate fully with reasonable requests by the Company, both during and after the Term, with respect to the
procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and
other countries and jurisdictions) relating to Developments. The Executive will not be required to incur or pay any costs or expenses in
connection with the rendering of such cooperation, and the Company will reimburse the Executive (within 30 days following receipt of an
invoice) for all reasonable legal fees incurred if the Executive determines in good faith that separate legal counsel is appropriate in the
circumstances. The Executive will sign all papers, including, without limitation, copyright applications, patent applications, declarations,
oaths, formal assignments, assignments of priority rights, and powers of attorney, and do all things that the Company may reasonably
deem necessary or desirable in order to protect the Company Groups rights and interests in any Development. If the Company is unable,
after reasonable effort, to secure the Executives signature on any such papers, any executive officer of the Company is expressly
authorized to execute any such papers as the Executives agent and attorneyinfact, coupled with interest, and the Executive hereby
irrevocably designates and appoints each executive officer of the Company as his agent and attorneyinfact to execute any such papers
on the Executives behalf and to take any and all other actions as the Company may deem necessary or desirable in order to protect the
Company Groups rights and interests in any Development, under the conditions described in this sentence.
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8. Remedies. The Executive and the Company acknowledge that the covenants contained in Sections 4, 5, 6 and 7 are reasonable under
the circumstances. Accordingly, if, in the opinion of any court of competent jurisdiction, any such covenant is not reasonable in any
respect, such court will have the right, power and authority to sever or modify any provision or provisions of such covenants as to the
court will appear not reasonable and to enforce the remainder of the covenants as so amended. The Executive further acknowledges that
the remedy at law available to the Company for breach of any of the Executives obligations under Sections 4, 5, 6 and 7 would be
inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, in addition to any other rights or remedies that the Company may have at law, in equity or under this Agreement,
upon proof of the Executives violation of any such provision of this Agreement, the Company will be entitled to seek immediate
injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual
damage or the posting of any bond.
9. Continued Availability and Cooperation. (a) For six years following termination of the Executives employment, the Executive will
reasonably cooperate with the Company and with the Companys counsel in connection with any present and future actual or threatened
litigation, administrative proceeding or investigation involving the Company Group that relates to events, occurrences or conduct
occurring (or claimed to have occurred) during the period of the Executives employment by the Company Group, and with respect to
which the Executive has pertinent information. The Executives cooperation will include, without limitation:
(i) Making himself reasonably available for interviews and discussions with the Companys counsel, as well as for
depositions and trial testimony;
(ii) If depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation
therefor, as and to the extent that the Company or the Companys counsel reasonably requests;
(iii) Refraining from impeding in any way the Companys prosecution or defense of such litigation or administrative
proceeding; and
(iv) Reasonably cooperating fully in the development and presentation of the Companys prosecution or defense of such
litigation or administrative proceeding.
(b) Any such cooperation will be on reasonable notice and take into account the Executives professional and personal commitments,
and the Executive will not be required to cooperate if the Executive determines in good faith that such cooperation would be contrary to
the Executives own legal interest. The Company will reimburse the Executive for reasonable travel, lodging, telephone and similar
expenses, as well as reasonable attorneysfees if the Executive determines in good faith that separate counsel is needed, incurred in
connection with any cooperation, consultation and advice rendered under this Agreement after the Executives termination of
employment; provided that any such reimbursements (i) comply with the Reimbursement Rules, and (ii) will be made within 30 days
following the Executive providing an invoice to the Company. The Executive will not be entitled to any separate compensation for any
matter referred to in this Section 9 unless the Executive reasonably establishes demonstrably lost wages or income as a result of the
cooperation required pursuant to this Section 9; provided that, in such case, the Executive must submit any claim for lost wages or income
relating to his cooperation required pursuant to this Section 9 during any calendar month by no later than 30 days following the close of
such month; and provided further, that the Companys payment to the Executive in respect of such lost wages or income shall be made by
no later than 30 days following the date on which the Executive submitted such claim to the Company.
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10. Code Section 280G. Notwithstanding anything to the contrary in this Agreement, in any other agreement between the Executive and
the Company, or in any plan maintained by the Company, if there is a Section 280G Change in Control (as defined in Section 10(e)(i)
below) following the Effective Date, the following rules shall apply:
(a) Except as otherwise provided in Section 10(b) below, if it is determined in accordance with Section 10(d) below that any portion of
the Contingent Compensation Payments (as defined in Section 10(e)(ii) below) that otherwise would be paid or provided to the Executive
or for his benefit in connection with the 280G Change in Control would be subject to the excise tax imposed under section 4999 of the
Code (the Excise Tax), then such Contingent Compensation Payments shall be reduced by the smallest total amount necessary in order
for no portion of such Contingent Compensation Payments to be subject to the Excise Tax.
(b) No reduction in any of the Executives Contingent Compensation Payments shall be made pursuant to Section 10(a) above if it is
determined in accordance with Section 10(d) below that the After Tax Amount of the Contingent Compensation Payments payable to the
Executive without such reduction would exceed the After Tax Amount of the reduced Contingent Compensation Payments payable to him
in accordance with Section 10(a) above. For purposes of the foregoing, (i) the After Tax Amountof the Contingent Compensation
Payments, as computed with, and as computed without, the reduction provided for under Section 10(a) above, means the amount of the
Contingent Compensation Payments, as so computed, that the Executive would retain after payment of all taxes (including without
limitation any federal, state or local income taxes, the Excise Tax or any other excise taxes, any Medicare or other employment taxes, and
any other taxes) imposed on such Contingent Compensation Payments in the year or years in which payable; and (ii) the amount of such
taxes shall be computed at the rates in effect under the applicable tax laws in the year in which the 280G Change in Control occurs, or if
then ascertainable, the rates in effect in any later year in which any Contingent Compensation Payment is expected to be paid following
the 280G Change in Control, and in the case of any income taxes, by using the maximum combined federal, state and (if applicable) local
income tax rates then in effect under such laws.
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(c) Any reduction in the Executives Contingent Compensation Payments required to be made pursuant to Section 10(a) above (the
Required Reduction) shall be made as follows: (i) first, any such Contingent Compensation Payments that became fully vested prior to
the 280G Change in Control and that pursuant to paragraph (b) of Treas. Reg. 1.280G1, Q/A 24, are treated as Contingent
Compensation Payments solely by reason of the acceleration of their originally scheduled dates of payment shall be reduced, by
cancellation of the acceleration of their vesting; (ii) second, any severance payments or benefits, performancebased cash or equity
incentive awards, or other Continent Compensation Payments the full amounts of which are treated as contingent on the Change in
Control pursuant to paragraph (a) of Treas. Reg. 1.280G1, Q/A 24, shall be reduced; and (iii) third, any cash or equity incentive
awards, or nonqualified deferred compensation amounts, that vest solely based on the Executives continued service with the Company,
and that pursuant to paragraph (c) of Treas. Reg. 1.280G1, Q/A 24, are treated as contingent on the Change in Control because they
become vested as a result of the Change in Control, shall be reduced, first by cancellation of any acceleration of their originally scheduled
dates of payment (if payment with respect to such items is not treated as automatically occurring upon the vesting of such items for
purposes of section 280G of the Code) and then, if necessary, by canceling the acceleration of their vesting. In each case, the amounts of
the Contingent Compensation Payments shall be reduced in the inverse order of their originally scheduled dates of payment or vesting, as
applicable, and shall be so reduced only to the extent necessary to achieve the Required Reduction.
(d) A determination as to whether any Excise Tax is payable with respect to the Executives Contingent Compensation Payments and, if
so, as to the amount thereof, and a determination as to whether any reduction in the Executives Contingent Compensation Payments is
required pursuant to the provisions of Sections 10(a) and (b) above, and, if so, as to the amount of the reduction so required, shall be made
no later than 15 days prior to the closing of the transaction or the occurrence of the event that constitutes the 280G Change in Control, or
as soon thereafter as administratively practicable. Such determinations, and the assumptions to be utilized in arriving at such
determinations, shall be made by an independent auditor (the "Auditor") jointly selected by the Executive and the Company, all of whose
fees and expenses shall be borne and directly paid solely by the Company. The Auditor shall be a nationally recognized public accounting
firm which has not, during the two years preceding the date of its selection, acted in any way on behalf of the Company or any other entity
included in the Company Group. If the Executive and the Company cannot agree on the firm to serve as the Auditor, then the Executive
and the Company shall each select one accounting firm and those two firms shall jointly select the accounting firm to serve as the
Auditor. The Auditor shall provide a written report of its determinations, including detailed supporting calculations, to both the Executive
and the Company. If the Auditor determines that no Excise Tax is payable with respect to the Executives Contingent Compensation
Payments, either as a result of any Required Reduction the Auditor has determined should be made thereto or because the Auditor has
determined that no Required Reduction must be made thereto, the written report which the auditor furnishes to the Executive and the
Company pursuant to the preceding sentence shall be accompanied by an opinion reasonably acceptable to the Executive that no Excise
Tax will be imposed with respect to the Executives Contingent Compensation Payments. The determinations made by the Auditor
pursuant to this Section 10(d) shall be binding upon the Executive and the Company. The fact that the Executives right to payments or
benefits may be reduced by reason of the limitations contained in this Section q0 will not of itself limit or otherwise affect any other
rights of the Executive under this Agreement.
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(e) For purposes of the foregoing, the following terms will have the following respective meanings:
(i) 80G Change in Controlmeans a change in the ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company, as determined in accordance with section 280G(b)(2) of the Code and the regulations
promulgated thereunder.
(ii) Contingent Compensation Paymentmeans any payment or benefit in the nature of compensation that is to be paid or
provided to the Executive or for his benefit in connection with a 280G Change in Control (whether under this Agreement or otherwise,
including by the entity, or by any affiliate of the entity, whose acquisition of the stock of the Company or its assets constitutes the Change
in Control) if the Executive is a disqualified individual(as defined in section 280G(c) of the Code) at the time of the 280G Change in
Control, to the extent that such payment or benefit is contingenton the 280G Change in Control within the meaning of section
280G(b)(2)(A)(i) of the Code and the regulations promulgated thereunder.
11. Dispute Resolution. (a) In the event that the Parties are unable to resolve any controversy or claim arising out of or in connection
with this Agreement or breach thereof, any Party may refer the dispute to binding arbitration, which, except as expressly provided
hereafter, will be the exclusive forum for resolving such claims. Such arbitration will be governed by Texas law and administered in
accordance with the commercial dispute rules and procedures of the American Arbitration Association (the AAA), which arbitration
will be a binding and conclusive settlement of any such claims or disputes. The arbitration will be conducted by a single arbitrator
selected by the Parties according to the rules of the AAA. In the event that the Parties fail to agree on the selection of the arbitrator within
30 days after either the initial request for arbitration, the arbitrator will be chosen by the AAA. The arbitration proceeding will commence
on a mutually agreeable date within 90 days after the initial request for arbitration. The forum for arbitration will be agreed on by the
Parties or, in the absence of any agreement, will be in a venue located in Tarrant County, Texas.
17
(b) The Executive will be responsible for the first $50,000 that he incurs in attorneysfees, litigation or arbitration costs, and any other
reasonable expenses, in each case in connection with any arbitration hereunder (the Arbitration Costs). The Company thereafter will
advance to the Executive any Arbitration Costs in excess of $50,000. In the event that the Executive does not prevail on at least one
material issue with respect to the dispute, the Executive will reimburse the Company for all Arbitration Costs advanced to the Executive in
connection with such arbitration; provided that the arbitrator will not otherwise have authority to award attorneysfees or costs to any
Party.
(c) The arbitrator will have no power or authority to make awards or orders granting relief that would not be available to a Party in a
court of law. The arbitrators award is limited by, and must comply with, this Agreement and applicable federal, state and local
laws. The decision of the arbitrator will be final and binding on the Parties.
(d) Notwithstanding the foregoing, no claim or controversy for injunctive or equitable relief contemplated by, or allowed under,
applicable law pursuant to Sections 4, 5, 6 and 7 will be subject to arbitration under this Section 11, but will instead be subject to
determination as provided in Section 16.
12. Other Agreements. No agreements (other than agreements evidencing any grants of equity and/or longterm incentive awards, or
other compensation, deferral or benefit plans) or representations or warranties, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any Party which are not expressly set forth in this Agreement. Nothing herein will be deemed to
provide the Executive with a right to remain a director, officer, employee, agent or service provider of the Company or any of its
Subsidiaries or Affiliates. Notwithstanding anything herein to the contrary, during the period commencing on the Effective Date and
ending on the expiration of the Restricted Period, the Executives obligations under Sections 4, 5, 6 and 7 will supersede any of the
Executives similar covenants to the Company under any other agreements between the Executive and the Company, including without
limitation, the Severance Program. Without limiting the generality or effect of the foregoing, the Parties agree that the Offer Letter and
the Termination Protection Agreement will be terminated effective as of the Effective Date, and that the Executives participation in the
Severance Program will be terminated as of the Effective Date.
13. Withholding of Taxes. The Company will withhold from any amounts payable under this Agreement all federal, state, local or other
taxes as the Company is required to withhold pursuant to any law or government regulation or ruling.
14. Successors and Binding Agreement. (a) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and
agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the
Company, including, without limitation, any Person acquiring, directly or indirectly, all or substantially all of the business or assets of the
Company, whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the
Companyfor purposes of this Agreement), but this Agreement will not otherwise be assignable or delegable by the Company, except
that the Company may assign its rights and delegate its duties hereunder to any Person who acquires all of the voting stock of the
Company (or to any parent entity thereof) so long as so doing does not materially and adversely affect the Executive's rights hereunder.
18
(b) This Agreement will inure to the benefit of and be enforceable by the Executives personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees. If the Executive dies while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.
(c) This Agreement is personal in nature and the Parties may not, without the consent of the other Parties, assign or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in Sections 14(a) and (b). Without limiting the generality
or effect of the foregoing, the Executives right to receive payments hereunder will not be assignable, transferable or delegable, whether
by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executives will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer contrary to this Section 14(c), the Company will have no liability to
pay any amount so attempted to be assigned, transferred or delegated.
15. Notices. Any notice, demand, claim or other communication under this Agreement will be in writing and will be deemed to have
been given (a) on delivery if delivered personally or (b) on the date of transmission thereof if sent by electronic facsimile transmission and
delivery is confirmed, but, in each case, only if addressed to the Parties in the following manner at the following addresses (or at the other
address as a Party may specify by notice to the other): (i) to the Company, to the attention of the General Counsel at its principal
executive offices; and (ii) to the Executive, at his principal residence as set forth in the Companys records.
16. Governing Law and Choice of Forum. (a) This Agreement will be construed and enforced according to the laws of the State of
Texas, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of laws of any jurisdiction other than the State of Texas.
(b) To the extent not otherwise provided for by Section 11, the Parties consent to the exclusive jurisdiction of all state and federal courts
located in Tarrant County, Texas, as well as to the jurisdiction of all courts of which an appeal may be taken from such courts, for the
purpose of any suit, action or other proceeding arising out of, or in connection with, this Agreement or that otherwise arises out of the
Executives employment relationship with the Company. Each Party hereby expressly waives (i) any and all rights to bring any suit,
action or other proceeding in or before any court or tribunal other than the courts described above, and covenants that it will not seek in
any manner to resolve any dispute other than as set forth in this paragraph and (ii) any and all objections that it may have to venue,
including, without limitation, the inconvenience of such forum, in any of such courts. In addition, the Parties consent to the service of
process by personal service or any manner in which notices may be delivered hereunder in accordance with this Agreement.
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17. Validity/Severability. The Parties agree that (a) the provisions of this Agreement will be severable in the event that, for any reason
whatsoever, any of the provisions hereof are invalid, void or otherwise unenforceable, (b) any such invalid, void or otherwise
unenforceable provisions will be replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise
unenforceable provisions but are valid and enforceable, and (c) the remaining provisions will remain valid and enforceable to the fullest
extent permitted by applicable law.
18. Effectiveness and Survival. (a) Except as otherwise specified in Section 2(a) or (b)(ii), this Agreement is only effective from and
after the Effective Date; provided that the Executive is employed by the Company on the Effective Date.
(b) The obligations of the Parties under this Agreement which by their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 3, 4, 5, 6, 7, 9, 19, 20 and 27) will survive any termination or
expiration of this Agreement.
19. Subsequent Employment. If, during the Restricted Period, the Executive is offered employment or the opportunity to enter into any
business activity, whether as owner, investor, executive, manager, employee, independent consultant, contractor, advisor or otherwise, the
Executive will inform the offeror of the existence of Sections 4, 5, 6, 7 and 9, and provide the offeror a copy thereof. The Executive
authorizes the Company to provide a copy of the relevant provisions of this Agreement to any of the Persons described in this Section 19
and to make such Persons aware of the Executives obligations under this Agreement.
20
20. Compliance with Section 409A. (a) The Parties intend that any amounts payable under this Agreement, and the Companys and the
Executives exercise of authority or discretion hereunder, will comply with the provisions of section 409A of the Code, along with the
rules, regulations and guidance promulgated thereunder by the Department of the Treasury or the Internal Revenue Service (collectively,
Section 409A) so as not to subject the Executive to the payment of any additional tax, interest or penalty which may be imposed under
Section 409A. The Company will construe and administer this Agreement in compliance with all applicable requirements of Section
409A. In furtherance thereof, to the extent that any provision of this Agreement would result in the Executive being subject to payment of
additional tax, interest or penalty under Section 409A, the Parties agree to amend this Agreement if permitted under Section 409A in a
manner which does not impose any additional taxes, interest or penalties on the Executive in order to bring this Agreement into
compliance with Section 409A, without materially changing the economic value of the arrangements under this Agreement to any Party,
and thereafter the Parties will interpret its provisions, and the Company will administer its provisions, in a manner that complies with
Section 409A. Notwithstanding the foregoing, no particular tax result for the Executive with respect to any income recognized by the
Executive in connection with this Agreement is guaranteed, and the Company will not be liable for any taxes, interest and penalties
imposed on the Executive under or as a result of Section 409A in connection with any other agreement or plan referred to herein, other
than any such taxes, interest and penalties imposed on the Executive under or as a result of Section 409A due to the Companys willful
failure to comply with the terms of this Agreement or, following the execution of this Agreement, those of any other agreement or plan;
provided that, for purposes of this sentence, an act or omission will be treated as willfulif the Company acts (or fails to act) in bad faith
and without a reasonable belief that such act or omission was in (or not opposed to) the best interests of the Executive. Notwithstanding
the immediately preceding sentence, in the event that any payment or benefit payable pursuant to this Agreement or the Second Amended
and Restated RadioShack Corporation Officers Supplemental Executive Retirement Plan is asserted by the Internal Revenue Service to
constitute deferred compensation subject to, and not in compliance with, Section 409A or otherwise result in a violation of Section 409A
(the "Payments"), the Company shall defend the Executive against such assertion and, upon final adjudication and assessment of any
income taxes imposed on the Executive by virtue of Section 409A on the Payments, the Company shall pay to the Executive, within 15
business days following written notice by the Executive of such adjudication, a cash lump sum amount which, after reduction of such
amount by any federal, state and local income taxes, and by any employment taxes, payable by the Executive thereon, would leave the
Executive with an amount equal to any taxes which are imposed under Section 409A and any penalties and/or interest imposed against the
Executive under Section 409A. The obligation of the Company to defend and indemnify in accordance with the foregoing is conditioned
upon (i) the Executive giving written notice to the Company within 15 business following any audit, notice or examination of the
Executives federal tax returns raising the application of Section 409A and (ii) the Executive permitting the Company, at the Companys
expense, to engage counsel to contest the application of Section 409A and control that aspect of any resulting audit or proceedings to
resolve the issue; provided that the Executive shall be permitted to reasonably approve such counsel. In accepting the indemnification
provided hereby, the Executive understands and agrees that the Company is not agreeing to, or obligated to, provide indemnification in
respect of income or withholding taxes arising from the Payments themselves (including, without limitation, any federal income tax
arising under section 409A(a)(1)(A) of the Code, but excluding from this sentence any penalties or interest resulting from the application
of section 409A(a)(1)(A) of the Code). Nothing herein will be deemed to be an admission by the Company that as of the date of the
execution of this Agreement the Company believes that any Payments are subject to taxes under Section 409A.
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(b) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a specified employee(within the meaning of
Section 409A and determined pursuant to any policies adopted by the Company consistent with Section 409A (a Specified Employee)),
at the time of the Executives separation from service and if any portion of the payments or benefits to be received by the Executive upon
separation from service would be considered deferred compensation under Section 409A (after taking into account all exclusions
applicable to such payments and benefits under Section 409A) and cannot be paid or provided to the Executive without the Executive
incurring taxes, interest or penalties under Section 409A, amounts that would otherwise be payable pursuant to this Agreement and
benefits that would otherwise be provided pursuant to this Agreement, in each case, during the sixmonth period immediately following
the Executives separation from service will instead be paid or made available on the first business day after the earlier of (i) the
expiration of six months from the date of the Executives separation from service and (ii) the Executives death (such earlier date, the
Delayed Payment Date). All benefits delayed pursuant to the preceding sentence shall commence to be provided on the Delayed
Payment Date, and on that date, there shall be paid to the Executive or, if he has died, to his estate, in a single cash lump sum, an amount
equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, plus interest thereon, at the Delayed Payment
Interest Rate (as defined below) computed from the date on which each such delayed payment otherwise would have been made to the
Executive until the Delayed Payment Date. For purposes of the foregoing, the Delayed Payment Interest Ratemeans the national
average annual rate of interest payable on jumbo sixmonth bank certificates of deposit, as quoted in the business section of the most
recently published Sunday edition of The New York Times preceding the Executives termination date.
(c) To the extent that the reimbursement of any expenses eligible for reimbursement or the provision of any inkind benefits under any
provision of this Agreement would be considered deferred compensation under Section 409A (after taking into account all exclusions
applicable to such reimbursements and benefits under Section 409A): (i) reimbursement of any such expense shall be made by the
Company as soon as administratively practicable after such expense has been incurred, but in any event by no later than December 31st of
the year following the year in which the Executive incurs such expense; (ii) the amount of such expenses eligible for reimbursement, or
inkind benefits to be provided, during any calendar year shall not affect the amount of such expenses eligible for reimbursement, or
inkind benefits to be provided, in any other calendar year; and (iii) the Executives right to receive such reimbursements or inkind
benefits shall not be subject to liquidation or exchange for another benefit (the rules, requirements and guidelines set forth in this
paragraph, the Reimbursement Rules).
(d) Each payment to be made to the Executive under this Agreement shall be treated as a separate paymentfor purposes of Treas.
Reg. 1.409A2(b)(2)(iii).
(e) Notwithstanding any provisions of this Agreement to the contrary, the date of the Executives "separation from service," as defined
in Section 409A (and as determined by applying the default presumptions in Treas. Reg. 1.409A1(h)(1)(ii)), shall be treated as the date
of his termination of employment for purposes (but only for the purposes) of determining the time of payment of any amount that becomes
payable to the Executive hereunder upon his termination of employment and that is properly treated as a deferral of compensation subject
to Section 409A after taking into account all exclusions applicable to such payment under Section 409A.
22
21. Amendment; Waiver. (a) This Agreement may be amended and any provision of this Agreement may be waived; provided that any
such amendment or waiver will be binding upon a Party only if such amendment or waiver is set forth in a writing executed by such
Party. No course of dealing between the Parties having any interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any Party under or by reason of this Agreement.
(b) No delay or failure in exercising any right, power or remedy hereunder will affect or operate as a waiver thereof; nor will any
single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any
further exercise thereof or of any other right, power or remedy.
22. Counterparts. This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more
than one Party), each of which will be deemed to be an original, but all of which taken together will constitute one and the same
agreement. This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other
electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same
binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Parties will
reexecute original forms thereof and deliver them to the requesting Party. No Party will raise the use of a facsimile machine or other
electronic means to deliver a signature or the fact that any signature was transmitted or communicated through the use of facsimile
machine or other electronic means as a defense to the formation of a contract and each Party forever waives any such defense.
23. Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive
part of or to affect the meaning or interpretation of this Agreement. Reference to any agreement, document or instrument means such
agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if
applicable, hereof. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
23
24. Defined Terms. In addition to the terms defined elsewhere herein, the following terms will have the following meanings when used
herein with initial capital terms:
Affiliatehas the meaning set forth in Rule 12b2 promulgated under section 12 of the Exchange Act.
Cause,prior to the occurrence of a Change in Control, means, as determined in good faith by a majority vote of the Board (excluding
the Executive if he is then a member of the Board) at a meeting of the Board held for such purpose, and where the Executive and the
Executives counsel had an opportunity (on at least 5 daysprior notice) to be heard before the Board:
(i) The Executives conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, theft or financial
impropriety;
(ii) The Executive has willfully and continuously failed to perform his duties (other than such failure resulting from incapacity due
to his illness, injury or Disability);
(iii) The Executive has willfully engaged in illegal conduct, an act of dishonesty, moral turpitude, dishonesty, fraud, theft,
financial impropriety or gross misconduct injurious to the Company or any of its Subsidiaries;
(iv) The Executive has willfully violated a material provision of the Companys written employment policies applicable to senior
executives, including, without limitation, those relating to ethics and business conduct and avoidance of conflicts, or the Executives
fiduciary duty to the Company or any of its Subsidiaries;
(v) Any act or omission constituting a material breach by the Executive of any provisions of Section 1(c), 4, 5, 6 or 7; or
(vi) Alcohol or prescription or other drug abuse substantially and continuously affecting work performance;
unless, in each case, the event constituting Cause is curable and has been cured by the Executive within 30 days of his receipt of notice
from the Company that an event constituting Cause has occurred and specifying the details of such event. For purposes of the preceding
definition of Cause, an act or omission will be treated as willfulif the Executive acts (or fails to act) in bad faith and without a
reasonable belief that such act or omission was in (or not opposed to) the best interests of the Company or its Subsidiaries.
24
Following the occurrence of a Change in Control, a termination of employment is for Causeif the Executive has been convicted of a
felony or the termination is evidenced by a resolution adopted in good faith by twothirds of the Board that the Executive (a) intentionally
and continually failed substantially to perform his reasonably assigned duties with the Company (other than a failure resulting from the
Executives incapacity due to physical or mental illness or from the Executives assignment of duties that would constitute Good Reason
(as hereinafter defined)) which failure continued for a period of at least 30 days after a written notice of demand for substantial
performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b)
intentionally engaged in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; provided,
however, that no termination of the Executives employment will be for Cause as set forth in clause (b) above until (x) there is delivered
to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (b) and specifying
the particulars thereof in detail, and (y) the Executive is provided an opportunity to be heard in person by the Board (with the assistance of
the Executives counsel if the Executive so desires). No act, nor failure to act, on the Executives part, will be considered intentional
unless the Executive has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Executives action or
failure to act was in the best interest of the Company. In any action involving the Executive and the Company with respect to a claim or
assertion that the Executives employment was properly terminated for Cause following a Change in Control, the Company has the
burden of proving that the Executives employment was properly terminated for Cause.
Change in Controlwill have the meaning ascribed to such term in the Equity Plan, as the Equity Plan is in effect on the Effective Date,
with all terms therein having the meanings ascribed to them in the Equity Plan; provided that, for purposes of the definition of the term
Incumbent Boardin the Equity Plan, the relevant date will be the Effective Date for purposes of this Agreement.
COBRAmeans the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
COBRA Amountmeans the monthly cost of maintaining health benefits for the Executive (and the Executives spouse and eligible
dependents) as of the date of the Executives termination of employment under a group health plan of the Company for purposes of
COBRA, excluding any shortterm or longterm disability insurance benefits.
Codemeans the Internal Revenue Code of 1986, as amended.
Competitive Businessmeans any business (or affiliated group of businesses) selling Consumer Electronics Products at retail that (i)
has, or is reasonably expected to have, gross annual revenues in excess of $250 million attributable to its sale of Consumer Electronics
Products for the fiscal year during which the Executive engages in the applicable conduct or for the following fiscal year and (ii) during
the applicable fiscal year, the sale of Consumer Electronics Products constitutes more than 25% of such business(or affiliated group of
businesses) annual revenues (and for such purpose, WalMart and its affiliate, Sams Club, shall each be deemed to annually sell at
least $250 million of Consumer Electronics Products and have such sales exceed 25% of their respective fiscal years annual revenues, to
the extent that they otherwise do not so exceed these thresholds). Consumer Electronics Productsare those type of products sold at the
retail level to the ultimate customer as are advertised by the Company Group. The manufacture of Consumer Electronics Products or the
sale of Consumer Electronics Products at levels of distribution other than the retail level is not considered engaging in a Competitive
Business.
25
Disabilityor Disabledmeans:
(i) The Executives incapacity due to physical or mental infirmity which impairs the Executive's ability to substantially perform
his duties and the essential functions of his position, with or without reasonable accommodation, on a fulltime basis, for a period of 180
consecutive days; or
(ii) The Executive becomes eligible to receive benefits under the Companys applicable longterm disability plan.
If the Board determines in good faith that the Executive is Disabled, the Company may give to the Executive written notice of the
Companys intention to terminate the Executives employment for Disability (the Notice of Disability). The Executives
employment with the Company will terminate due to Disability effective on the 30th day after the Executives receipt of the Notice of
Disability (the Disability Effective Date); provided that, within the 30 days after receipt of the Notice of Disability, the Executive has
not returned to fulltime performance of the Executives duties. The Executive will fully cooperate in connection with the determination
of whether Disability exists.
Equity Planmeans the RadioShack Corporation 2009 Incentive Stock Plan.
Exchange Actmeans the Securities Exchange Act of 1934, as amended.
Good Reasonmeans the occurrence of any of the following without the Executives written consent:
(i) Any material reduction in the Executives annual cash compensation opportunity expressed in terms of the Executives Base
Salary and Target Bonus as in effect for 2011 and as may be increased from time to time;
(ii) A material reduction of the Executives authority or duties, such as a diminution in the Executives status or responsibilities
(as such authorities, status and duties may be increased due to promotions from time to time);
(iii) The failure of the Executive to be elected to the Board;
26
(iv) Any act or omission constituting a material breach by the Company of any provisions of this Agreement; or
(v) The relocation of the Executives principal place of employment to a location outside of the Fort Worth, Texas metropolitan
area.
Notwithstanding the foregoing, any of the circumstances described above may not serve as the basis for the Executives resignation for
Good Reason unless (1) the Executive provides written notice to the Company within 60 days of the initial existence of the condition(s)
constituting Good Reason and (2) the Company fails to cure such condition(s) within 30 days after receipt from the Executive of such
notice; provided that Good Reason will cease to exist with respect to a condition two years following the initial existence of such
condition (but if the Executive does not claim Good Reason as a result of a condition within such period, the Executive will not be deemed
to have waived the right to claim Good Reason upon the existence or occurrence of a subsequent (or similar) condition).
Personmeans an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a
joint venture or an unincorporated organization.
Protection Periodmeans the period commencing on the date the Company enters into a definitive agreement, the consummation of the
transactions contemplated by such agreement would constitute a Change in Control, and ending upon the earlier of the occurrence of a
Change in Control or the date such agreement is otherwise terminated or abandoned.
Restricted Periodmeans the 12month period following any termination of the Executives employment.
Restricted Territorymeans any country in which any member of the Company Group has, directly or indirectly by express direction to,
or contract with, a third party, sold products within 24 months preceding the Executives termination of employment; provided that the
Company Group has generated, or is reasonably expected to generate, gross annual revenues in excess of $50 million attributable to such
country for the fiscal year during which the Executive engages in the applicable conduct.
Subsidiaryof any Person means another Person (other than a natural Person), an aggregate amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at least a majority of the board of directors or other governing body
(or, if there are no such voting interests, 50% or more of the equity interests of which), are owned, directly or indirectly, by such first
Person.
25. Construction. Any reference to a Section herein is a reference to a section of this Agreement unless otherwise stated. Any reference
to a day or days herein refers to a calendar day or days unless otherwise stated.
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26. Compliance with DoddFrank. All payments under this Agreement (including, without limitation, the Base Salary, the Promotional
LTI Award, all other LTI Awards, and all Bonus Awards), if and to the extent subject to the DoddFrank Wall Street Reform and
Consumer Protection Act (the DoddFrank Act), will be subject to any incentive compensation policy established from time to time by
the Company to comply with the DoddFrank Act, but only to the extent that the provisions of any policy so established are required by
the DoddFrank Act.
27. Indemnification. The Company will provide the Executive with indemnification and directorsand officersliability insurance on
terms no less favorable than those applicable to directors or officers of the Company generally.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of January 21, 2011.
THE COMPANY:
By: /s/ Daniel R. Feehan
Name: Daniel R. Feehan
Title: Presiding Director
THE EXECUTIVE:
/s/ James F. Gooch
James F. Gooch
EXHIBIT A
Grant Date: ________________
Purchase Price $____ per Share
RADIOSHACK CORPORATION 2009 INCENTIVE STOCK PLAN
STOCK OPTION AGREEMENT
THIS AGREEMENT (this Agreement) is effective as of the date set forth above (the Grant Date), between RadioShack Corporation,
a Delaware corporation (the Company), and the person (the Optionee) executing this Agreement as the Optionee hereof) named in
the notice of grant of stock options (the Notice) attached hereto, the provisions of which are incorporated herein by
reference. Capitalized terms used in this Agreement but not defined herein shall have the meanings assigned to them in the RadioShack
Corporation 2009 Incentive Stock Plan (the Plan).
WHEREAS, on February 19, 2009, the Board of Directors of the Company approved the Plan to provide an additional incentive to certain
officers, key employees, directors, consultants and other advisors of the Company and its Subsidiaries, and then directed that the Plan be
submitted to the stockholders of the Company for approval;
WHEREAS, on May 21, 2009 the stockholders of the Company approved the adoption of the Plan; and
WHEREAS, the Committee responsible for administration of the Plan and the Board have determined that it is in the best interests of the
Company and its stockholders to grant an Option to the Optionee as provided herein;
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the Option set forth on the Notice, subject to, and in accordance with, the terms and
conditions set forth in this Agreement.
1.2 This Agreement shall be construed in accordance and consistent with, and subject to the provisions of, the Plan, the provisions of
which are incorporated herein by reference. In the event of a conflict between this Agreement and the Plan, the Plan shall control.
2. Purchase Price.
The price at which the Optionee shall be entitled to purchase Shares upon the exercise of the Option shall be the purchase price set forth at
the top of this Agreement (the Purchase Price).
3. Exercise Term.
The Option shall be exercisable to the extent and in the manner provided in Section 4 for a period of seven years from the Grant Date (the
Exercise Term); provided that the Option may expire earlier as provided in Section 6.
4. Exercisability of Option.
Unless otherwise provided in this Agreement or the Plan, the Option shall entitle the Optionee to purchase on and after February 1, 2012,
in whole at any time or in part from time to time, 10% of the total number of Shares underlying the Option, and an additional 15% of the
total number of Shares underlying the Option on and after February 1, 2013, and an additional 25% of the total number of Shares
underlying the Option on and after February 1, 2014, and an additional 50% of the total number of Shares underlying the Option on and
after February 1, 2015, and each such right of purchase shall be cumulative and shall continue, unless sooner exercised or the Option
expires as herein provided, during the remaining period of the Exercise Term. Any fractional number of Shares resulting from the
application of the fractions set forth in this Section 4 shall be rounded to the next higher or lower whole number of Shares, but such
rounding shall not result in the Optionee having the right to purchase more than the total number of Shares underlying the Option.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Agreement and the Plan, the Option shall be exercised by delivery of notice (the Exercise
Notice) in writing in person, or by facsimile or electronic means, or by certified mail, return receipt requested, and to such person, entity
and location, as may be designated by or otherwise acceptable to the Secretary of the Company. The Exercise Notice shall state that the
Optionee is electing to exercise the Option and the number of Shares in respect of which the Option is being exercised. The Exercise
Notice shall be signed or authorized by the Optionee. If requested by the Committee, the Optionee shall (i) deliver this Agreement to the
Secretary of the Company, who shall endorse thereon a notation of such exercise, and (ii) provide satisfactory proof as to the right of the
Optionee to exercise the Option. As used in this Section 5, deliverymeans that the Exercise Notice and Purchase Price have been
received by the Company or its specified designee in accordance with Section 5.2 prior to expiration of the Option as provided in Section
6.1.
5.2 The Exercise Notice shall be accompanied by the full Purchase Price for the Shares in respect of which the Option is being exercised,
in cash, by certified check or in such other manner not inconsistent with the provisions of the Plan as may be designated by the
Committee, or, in the discretion of the Committee, in whole or in part, by transferring Shares to the Company having a Fair Market Value
on the most recent trading day preceding the date of exercise equal to the cash amount for which such Shares are substituted.
2
5.3 Upon timely receipt of the Exercise Notice and full payment of the Purchase Price for the Shares in respect of which the Option is
being exercised, the Company shall, subject to the terms of the Plan, take such action as may be necessary to effect the issuance to the
Optionee of the number of Shares as to which such exercise was effective.
5.4 The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Shares underlying
the Option until (i) the Optionee exercises the Option pursuant to the terms of this Agreement and pays the full Purchase Price for the
number of Shares in respect of which the Option was exercised, and (ii) the Company issues and delivers such Shares to the Optionee or to
a broker approved by the Company, whereupon the Optionee shall have full voting and other ownership rights with respect thereto.
6. Expiration of Option.
6.1 The Option shall expire and become null and void upon the first to occur of:
a) the expiration of three months after the Optionee ceases to be employed by the Company or any of its Subsidiaries for any reason
other than termination for one of the reasons set forth in Section 6.1 b), c) or d);
b) the expiration of three years since the Optionees (i) termination of employment by reason of death or Disability, as defined below,
or (ii) retirement at age 55 or older (Retirement);
c) the first anniversary of the Optionees termination of employment following a Change in Control;
d) the Optionees termination of employment for Cause; or
e) the end of the Exercise Term.
For purposes of this Agreement, Causeand Disabilityshall have the meaning ascribed to such term in the Agreement between the
Optionee and the Company, executed as of January 21, 2011. Except as provided in Section 6.2 and if the Optionees employment were
to be terminated for Cause (in which case the Option shall immediately become null and void in its entirety), only those portions of the
Option exercisable as of the date of termination of the Optionees employment may be exercised.
In the event of the Optionees death, the Option shall be exercisable, to the extent provided in the Plan and this Agreement, by the legatee
under the Optionees will or by the Optionees personal representative or distributee and such person shall be substituted for the
Optionee each time the Optionee is referred to herein.
6.2 Notwithstanding the provisions of Section 4:
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a) upon the Optionees death or Disability, the Option shall immediately become fully exercisable and shall remain so until the
expiration of the period provided in Section 6.1;
b) upon the Optionees Retirement, the Option shall immediately become fully exercisable, provided that the Optionee has held the
Option for a period of at least 12 months from the Grant Date, and shall remain so until the expiration of the period provided in Section
6.1; and
c) upon any Change in Control, the Option shall become exercisable as provided in Section 7.
7. Effect of Change in Control.
Notwithstanding anything contained in this Agreement to the contrary, in the event of a Change in Control, (i) the Option shall
immediately become fully exercisable for the entire number of Shares covered thereby through the expiration of the applicable period
specified in Section 6.1, and (ii) the Optionee will be permitted to surrender for cancellation, within 60 days after the Change in Control,
all or any portion of the Option not yet exercised, and the Optionee will be entitled to receive immediately a cash payment in an amount
equal to the excess, if any, of (A) the Fair Market Value on the most recent trading day preceding the date of the surrender of the Shares
underlying the Option or portion thereof surrendered, over (B) the aggregate Purchase Price of the Shares underlying the Option or portion
thereof surrendered.
8. Nontransferability.
The Option shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee or the Optionees personal representative.
9. No Right to Continued Employment.
Nothing in this Agreement or the Plan shall be interpreted or construed to confer upon the Optionee any right or contract with respect to
continued employment by the Company or any Subsidiary, nor shall this Agreement or the Plan interfere in any way with the right of the
Optionees employer to terminate the Optionees employment at any time.
10. Adjustments.
In the event of a Change in Capitalization, the Committee shall make appropriate adjustments to the number and class of Shares
underlying the Option and the Purchase Price for such Shares. Any such adjustment shall be made in accordance with the provisions of
the Plan and shall be effective, final, binding and conclusive for all purposes of the Plan and this Agreement.
4
11. Effect of Certain Transactions.
Subject to Section 7, upon the effective date of (i) the liquidation or dissolution of the Company, or (ii) a merger or consolidation of the
Company (in the case of (i) or (ii), a Transaction), the Option shall continue in effect in accordance with its terms, except that after the
Transaction, upon exercise of the Option and payment of the Purchase Price the Optionee shall only be entitled to receive, with respect to
each Share underlying the Option, the same amount and kind of stock, securities, cash, property or other consideration that a holder of a
Share was entitled to receive in the Transaction.
12. Withholding of Taxes and Notice of Disposition.
12.1 The Company shall have the right to deduct from any distribution of cash to the Optionee an amount equal to the Withholding Tax
with respect to the Option. If the Optionee experiences a Taxable Event in connection with the receipt of Shares pursuant to an Option
exercise, the Company shall withhold a portion of the Shares then issuable to the Optionee having an aggregate Fair Market Value, on the
most recent trading day preceding the date of the exercise of the Option, equal to the Withholding Tax.
13. Optionee Bound by the Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. The
Optionee hereby acknowledges receipt of the prospectus regarding the offering and sale of the Shares pursuant to the Plan.
14. Severability.
Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their
terms.
15. Governing Law and Forum.
The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas without
giving effect to the conflicts of law principles thereof. Any suit brought under this Agreement shall only be brought in the appropriate
state or federal court located in Tarrant County, Texas.
16. Successors in Interest.
This Agreement shall inure to the benefit of, and be binding upon, any successor of the Company. This Agreement shall inure to the
benefit of the Optionees personal representative. All obligations imposed upon the Optionee and all rights granted to the Company
under this Agreement shall be effective, final, binding and conclusive for all purposes upon the Optionees heirs, executors,
administrators and personal representatives.
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17. Resolution of Disputes.
Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application
of this Agreement shall be resolved by the Committee. Any resolution made hereunder by the Committee shall be effective, final, binding
and conclusive on the Optionee and the Company for all purposes.
18. Entire Agreement; Amendment.
This Agreement, together with the documents incorporated herein by reference, represents the entire agreement between the parties with
respect to the subject matter hereof. The Committee may terminate, amend or modify this Agreement, provided that no such termination,
amendment or modification may in any way adversely affect the Optionees rights under this Agreement without the Optionees written
approval.
19. Acceptance.
Unless the Optionee notifies the Company in writing within 30 days after the date the Company mailed or delivered this Agreement to the
Optionee that the Optionee does not accept the terms of this Agreement, the Optionee shall be deemed to have accepted, and be bound by,
the terms of this Agreement.
6
THE COMPANY:
By: ___________________________
Name: ________________________
Title: __________________________
OPTIONEE:
_______________________________
James F. Gooch
7
EXHIBIT B
MUTUAL GENERAL RELEASE AGREEMENT
This Mutual General Release Agreement (this Agreement), dated ___________, 20__ is between RadioShack Corporation, a Delaware
corporation (RadioShack), and James F. Gooch (Participant) (collectively the Partiesand each a Party).
1. Separation of Employment with RadioShack.
a. Effective _______, 20__ (the Effective Date), Participant is terminated and separated from his position as
_______________________ of RadioShack, and Participant relinquishes and resigns from all officer and director positions, all other titles,
and all authorities with respect to RadioShack and any affiliated entity of RadioShack (and will be deemed terminated and separated from
employment with RadioShack for all purposes). Except as otherwise provided in the Agreement between RadioShack and Participant,
executed as of January 21, 2011 (the Contract), on the Effective Date, Participants salary and benefits from RadioShack will cease to
accrue, and he will cease to be eligible to contribute to any employee benefit plans or programs of RadioShack or any affiliated entity of
RadioShack (for the avoidance of doubt, Participants rights under Section 27 of the Contract are specifically excluded from this
provision).
b. As consideration to Participant for this Agreement, RadioShack agrees to pay Participant severance payments and benefits in
accordance with the terms of the Contract; provided that Participant does not exercise his right of revocation under Section 5 hereof.
c. This Agreement will be construed in accordance and consistent with, and subject to, the provisions of the Contract (the provisions of
which are incorporated herein by reference).
2. Affirmation of Continuing Obligations. Participant hereby acknowledges and affirms that he will comply in all respects with all of
his continuing obligations under the Contract, including, without limitation, Sections 4, 5, 6, 7, 9 and 19 of the Contract.
3. NonDisparagement. In consideration of the other commitments in this Agreement, each of Participant and RadioShack (for purposes
hereof, RadioShackmeans only (i) RadioShack by press release or other formally released announcement and (ii) the executive officers
and directors thereof and not any other employees) agrees not to make any public statements that disparage the other Party, or in the case
of RadioShack, its respective subsidiaries, affiliates, divisions, employees, officers, directors (with respect to employees, officers and
directors, solely in connection with their affiliation with RadioShack), products, articles, parts, supplies, accessories or
services. Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral
proceedings (including, without limitation, depositions in connection with such proceedings) will not be subject to this Section 3. Nothing
in this Section 3 is intended to (A) limit in any way Participants ability to compete fairly with RadioShack in the future, to the extent
otherwise permitted (subject to the terms of the Contract), (B) prevent any Party from conferring in confidence with his or its legal
representatives, or (C) prevent any Party from responding publicly to incorrect, disparaging or derogatory public statements made after the
Effective Date to the extent reasonably necessary to correct or refute such statements.
4. Injunctive Relief; Damages. Each Party acknowledges that any breach of this Agreement may cause irreparable injury to the other
Party and that money damages alone would be inadequate to compensate it. Upon a breach or threatened breach by any Party of any
provision of this Agreement, the other Party is entitled to seek a temporary restraining order, preliminary injunction, permanent injunction
or other relief restraining the breaching Party from such breach without posting a bond. Nothing herein will be construed as prohibiting
any Party from pursuing any other remedies for such breach or threatened breach, including recovery of damages from the other Party. In
the event that RadioShack seeks damages for any breach of this Agreement, any portion of the severance payments and benefits set forth
in the Contract will not be considered a measure of or limit on such damages.
5. Participant Release.
a. In consideration of RadioShacks commitment to provide the severance payments and benefits contemplated by the Contract,
Participant, for himself, his spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons
claiming through Participant, if any, knowingly and voluntarily releases and forever discharges RadioShack, its affiliates, subsidiaries,
parents, divisions, and the current, future and former employees, officers, directors, stockholders, partners, joint venturers, consultants,
insurers, trustees and agents thereof, and their respective successors and assigns (in each case, solely in connection with their affiliation
with RadioShack), from any and all claims, causes of action, demands, fees and liabilities of any kind whatsoever, whether known or
unknown, suspected or unsuspected, arising out of or relating in any way to Participants service or separation from service (including,
but not limited to, Participants service as an employee, officer, director and/or manager), or otherwise based upon acts or events that
occurred on or before the date on which Participant executes this Agreement, that Participant has, has ever had or may have up to and
including the date of Participants execution of this Agreement, including, but not limited to rights arising out of alleged violations of any
contracts, express or implied, any covenant of good faith or fair dealing, express or implied, any tort or common law claims, any legal
restrictions on RadioShacks right to terminate employees, and any claims under any federal, state, local or other governmental statute,
regulation, or ordinance, including, without limitation: (i) claims of discrimination, harassment or retaliation under equal employment
laws and any and all other federal, state or local equal opportunity laws; (ii) claims of wrongful termination of employment,
whistleblowerclaims, and claims for wrongful termination in violation of public policy; (iii) claims of violation of wage and hour laws,
including but not limited to claims for overtime pay, meal and rest period violations, and recordkeeping violations; (iv) claims of violation
of federal, state or local laws concerning leaves of absence; and (v) any alleged violation of:
2
The Civil Rights Act of 1991, as amended;
The Older Workers Benefit Protection Act of 1990, as amended;
The Family and Medical Leave Act of 1993, as amended;
The Equal Pay Act, as amended;
The Texas Labor Code, as amended;
The Texas Commission on Human Rights Act, as amended;
The Texas Pay Day Act, as amended;
Chapter 38 of the Texas Civil Practices and Remedies Code, as amended;
3
Notwithstanding anything herein to the contrary, Participants release of claims will not apply to: (A) Participants rights of
indemnification and directorsand officersliability insurance coverage, if any, to which he is entitled with regard to his service as an
officer and/or director of RadioShack or any of its parents, subsidiaries or affiliates; (B) Participants rights, if any, to or under
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any claims for vested or accrued benefits or entitlements
under any applicable plan, agreement, program, award, policy or arrangement of RadioShack and its parents, subsidiaries and affiliates in
accordance with the terms of such plan, agreement, program, award, policy or arrangement; (C) Participants rights under any provisions
of the Contract which are intended to survive termination of employment or under this Agreement; (D) any rights or claims which arise
after the date on which Participant executes this Agreement; (E) any rights Participant may have to obtain contribution as permitted by law
in the event of entry of judgment against Participant as a result of any act or failure to act, solely in his capacity as an employee or director
of RadioShack, for which Participant, on the one hand, and RadioShack and its parents, subsidiaries or affiliates on the other hand, are
jointly liable; or (F) Participants rights as a stockholder of RadioShack. Excluded from the Participants release of claims are any
claims which cannot be waived by law.
i. Participant has executed this Agreement knowingly and voluntarily;
ii. Participant has read and understands this Agreement in its entirety, including, without limitation, the waiver of rights under the Age
Discrimination in Employment Act;
iii. Participant has been advised and directed orally and in writing (and this Section 5(b) constitutes such written direction) to seek legal
counsel and any other advice he wishes with respect to the terms of this Agreement before executing it;
iv. Participant has sought such counsel, or freely and voluntarily waives the right to consult with counsel, and Participant has had an
opportunity, if he so desires, to discuss with counsel the terms of this Agreement and their meaning;
v. Participant enters into this Agreement knowingly and voluntarily, without duress or reservation of any kind, and after having given the
matter full and careful consideration; and
vi. Participant has been offered 21 calendar days after receipt of this Agreement to consider its terms before executing it.
c. Participant will have seven calendar days from the date of his execution of this Agreement to revoke this Agreement by providing
written notice of the revocation as set forth below, in which event this Agreement will be unenforceable and null and void.
4
d. 21 DAYS TO SIGN; SEVENDAY REVOCATION PERIOD. PARTICIPANT UNDERSTANDS THAT HE MAY TAKE UP TO
21 CALENDAR DAYS FROM THE DATE OF RECEIPT OF THIS AGREEMENT TO CONSIDER THIS AGREEMENT BEFORE
SIGNING IT. FULLY UNDERSTANDING PARTICIPANTS RIGHT TO TAKE 21 CALENDAR DAYS TO CONSIDER SIGNING
THIS AGREEMENT, AND AFTER HAVING SUFFICIENT TIME TO CONSIDER PARTICIPANTS OPTIONS, IF PARTICIPANT
EXECUTES THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE 21 CALENDAR DAY PERIOD, PARTICIPANT WAIVES
HIS RIGHT TO TAKE THE FULL 21 CALENDAR DAY PERIOD. PARTICIPANT FURTHER UNDERSTANDS THAT HE MAY
REVOKE THIS AGREEMENT AT ANY TIME DURING THE SEVEN CALENDAR DAYS AFTER SIGNING IT, AND THAT THIS
AGREEMENT WILL NOT BECOME BINDING UNTIL THE SEVEN CALENDAR DAY REVOCATION PERIOD HAS PASSED.
MS CF5121
The revocation must be received no later than 5:00 p.m. Central time on the seventh calendar day following Participants execution of this
Agreement.
6. RadioShack Release. In consideration of the covenants contained herein, RadioShack (for itself and on behalf of its affiliates,
subsidiaries, parents, divisions, and, to the extent permitted by law, the current, future and former employees, officers, directors,
stockholders, partners, joint venturers, consultants, insurers, trustees and agents thereof, and their respective successors and assigns (in
each case, solely in connection with their affiliation with RadioShack)), knowingly and voluntarily releases and forever discharges
Participant and his spouse, heirs, administrators, children, representatives, executors, successors and assigns (collectively, the Released
Group) from any and all claims, causes of action, demands, fees and liabilities of any kind whatsoever, whether known or unknown,
suspected or unsuspected, arising out of or relating in any way to Participants service or separation from service (including, but not
limited to, Participants service as an employee, officer, director and/or manager), or otherwise based upon acts or events that occurred on
or before the date on which RadioShack executes this Agreement, that RadioShack has, has ever had or may have up to and including the
date of RadioShacks execution of this Agreement; provided that nothing herein will be deemed to release or discharge any member of
the Released Group from any claims, causes of action, demands, fees or liabilities of any kind whatsoever, arising out of or relating to: (a)
the enforcement of RadioShacks rights hereunder or with respect to the Contract; (b) any rights or claims which arise after the date on
which RadioShack executes this Agreement; (c) Participants illegal conduct, fraud (including, without limitation, undiscovered financial
fraud), embezzlement or other willful gross misconduct; or (d) any claims, causes of action, demands, fees or liabilities of any kind
whatsoever which cannot be waived by law.
5
7. No Admission. This Agreement will not in any way be construed as an admission by any of the Parties of any act of discrimination or
other unlawful act whatsoever against any Party or any other person, and RadioShack specifically disclaims any liability to or
discrimination against Participant or any other person on the part of itself, its subsidiaries and divisions, and all their respective employees
and agents.
8. Severability. It is the desire and intent of the Parties that the provisions of this Agreement will be enforced to the fullest extent
permissible. Accordingly, if any provision of this Agreement proves to be invalid or unenforceable, the remainder of this Agreement will
not be affected, and in lieu, a provision as similar in terms as possible will be added.
between the Parties with respect to the subject matter hereof and this Agreement may not be modified by any oral or written agreement
unless same is in writing and signed by the Parties.
10. Governing Law and Choice of Forum.
a. This Agreement will be construed and enforced according to the laws of the State of Texas, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Texas or any other jurisdiction) that would cause the application of laws
of any jurisdiction other than the State of Texas.
b. The Parties consent to the exclusive jurisdiction of all state and federal courts located in Tarrant County, Texas, as well as to the
jurisdiction of all courts of which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising
out of, or in connection with, this Agreement or that otherwise arises out of Participants employment relationship with
RadioShack. Each Party hereby expressly waives (i) any and all rights to bring any suit, action or other proceeding in or before any court
or tribunal other than the courts described above, and covenants that it will not seek in any manner to resolve any dispute other than as set
forth in this paragraph and (ii) any and all objections that it may have to venue, including, without limitation, the inconvenience of such
forum, in any of such courts. In addition, the Parties consent to the service of process by personal service or any manner in which notices
may be delivered hereunder in accordance with this Agreement.
11. Survival. The obligations of the Parties under this Agreement will survive the termination of Participants employment and will
thereafter be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of
any contract or of any other duty.
12. Failure to Enforce. Any Partys failure to enforce this Agreement on the occurrence of one or more events that violate (or allegedly
violate) this Agreement will not constitute a waiver or release of any right to enforce this Agreement.
6
7
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date(s) set forth below.
RADIOSHACK:
RadioShack Corporation, for itself and its
subsidiaries and divisions:
______________________________________________
By:
Its:
PARTICIPANT:
______________________________________________
Name: James F. Gooch
Date: ________________
8
Exhibit 10.61
Mail Stop #CF5119
Fort Worth, Texas 761021964
Office 8174153020
Fax 8174152490
May 20, 2009
Sharon S. Stufflebeme
2200 Highland Meadows Drive
Colleyville, TX 76034
Dear Ms. Stufflebeme:
It is our pleasure to extend a contingent offer of employment to you to join the RadioShack team as Senior Vice President Chief
Information Officer reporting to Julian Day, Chairman and Chief Executive Officer. This offer is contingent upon the satisfactory
completion of a background investigation which includes criminal and reference check information. The specifics of this employment
offer are set forth below. The Company reserves the right to modify these compensation and benefit plans at anytime without legal
consideration or notice.
Base Salary $13,461.53 biweekly ($350,000 annualized)
Target
Bonus
Your target bonus opportunity will be 70% of base salary and will be based on company performance metrics. This bonus
opportunity will be prorated for 2009. We agree to guarantee your 2009 bonus, payable in 2010, at a minimum of $75,000. In
order to receive any payment under the Companys annual bonus plan, you must be employed on the bonus payment date.
Signon$25,000 taxable income which will be paid as soon as practical upon reporting to work. In the event you voluntarily terminate
your employment with RadioShack within your first twelve months of employment, you must reimburse the Company for 100%
of the amount of the signon bonus paid to you.
Long Term Incentive You will participate in the 2009 Long Term Incentive Plan 3 Year Plan.
This plan is for the fiscal (calendar) years 2009, 2010 and 2011, payable in 2012. The target for this plan is $245,000 which will be
prorated.
EquityYou will be eligible for annual grants of restricted stock and stock options commensurate with your position. These grants are
normally made during the first quarter of the calendar year.
Vacation
You will be eligible for vacation benefits based on continuous employment as follows:
4 weeks upon hire, prorated to the end of the calendar year
4 weeks on each successive January 1 through 20 years
5 weeks on each successive January 1 following 20 years
Sharon S. Stufflebeme
May 20, 2009
Page 2
Health &
Welfare
Plans
You will be eligible for the basic group medical, dental, vision, life, AD&D, disability, and flexible reimbursement plans 6
months following your first day of employment. In addition, you may cover your lawful spouse, same or opposite sex
domestic partner, and eligible children. You will receive enrollment information shortly after you have reported for
work. You will be reimbursed for COBRA payments made during your eligibility period.
401 (k) Plan This plan is a qualified retirement plan with various investment options, which allows participants to make a pretax
contribution and receive a matching contribution from the company of $1 for $1 up to a 4% contribution level that vests
immediately. If you are 18 years of age or older and a nontemporary employee, you are eligible to enroll and participate
in the Plan as soon as your first anniversary. A complete set of enrollment materials will be provided closer to your
eligibility date.
Stock
Ownership
Our shareholders and the investment community often analyze and measure the commitment of management to the company
through share ownership. With this in mind, our Board of Directors adopted an ownership policy for all officers. At your
level you will be required to own RadioShack Corporation common stock having a value equal to one and onehalf times
your base salary. A review to determine compliance with this policy will occur as of each December 31. You are not
expected to reach this level immediately.
Other benefits for which you will be eligible include:
OfficersSeverance Program
Executive Life
Executive LTD
More detailed information about each of these benefits will be covered during your new employee executive orientation.
This is a very exciting time to join RadioShack Corporation. It is my hope that after accepting this contingent employment offer, you will
be available to report for work no later than June 8, 2009.
Please sign, date and return this letter to me at your earliest convenience via facsimile to 8174152490. Meanwhile, if you have any
questions, do not hesitate to call me at 8174153020.
Welcome to RadioShack Corporation!
Sincerely,
Jana Freundlich
Vice President Human Resources
Accepted:
/s/ Sharon Stufflebeme 5/21/09
______________________________________ ____________________________________
Sharon Stufflebeme Date
Exhibit 10.63
Mail Stop #CF5119
Fort Worth, Texas 761021964
Office 8174153020
Fax 8174152490
May 28, 2010
Ms. Mary Ann Doran
545 Briarridge Lane
Southlake TX 76092
Dear Ms. Doran:
It is our pleasure to extend a contingent offer of employment to you to join the RadioShack team as Senior Vice President Human
Resources reporting to Julian Day Chief Executive Offer. This offer is contingent upon the satisfactory completion of a background
investigation which includes criminal and reference check information. The specifics of this employment offer are set forth below. The
Company reserves the right to modify these compensation and benefit plans at anytime without legal consideration or notice.
Base Salary $9,615.39 biweekly ($250,000 annualized)
Target Bonus Your target bonus opportunity will be 60% of base salary and will be based on company performance metrics. This
bonus opportunity will be prorated for 2010.
Signon$10,000 taxable income which will be paid as soon as practical upon reporting to work. In the event you voluntarily terminate
your employment with RadioShack within your first twelve months of employment, you must reimburse the Company for 100%
of the amount of the signon bonus paid to you.
Long Term Incentive You will participate in the following longterm incentive plan:
2010 Long Term Incentive Plan Three Year Plan
This plan is for the fiscal (calendar) years 2010, 2011 and 2012, payable in 2013. The target for this plan is $150,000 which will be
prorated.
EquityYou will be eligible for annual grants of restricted stock and/or stock options commensurate with your position, which we
anticipate to be between $100,000 and $200,000 in value per year. These grants are normally made during the first quarter of the
calendar year.
Vacation You will be eligible for vacation benefits as follows:
3 weeks during calendar 2010
4 weeks on each successive January 1 through 20 years of
continuous employment
5 weeks on each successive January 1 following 20 years of
continuous employment
Health &
Welfare
Plans
You will be eligible for the basic group medical, dental, vision, life, AD&D, disability, and flexible reimbursement plans 6
months following your first day of employment. In addition, you may cover your lawful spouse, same or opposite sex
domestic partner, and eligible children. You will receive enrollment information shortly after you have reported for work.
Ms. Mary Ann Doran
May 28, 2010
Page 2
401
(k)
Plan
This plan is a qualified retirement plan with various investment options, which allows participants to make a pretax contribution
and receive a matching contribution from the company of $1 for $1 up to a 4% contribution level that vests immediately. If you are
18 years of age or older and a nontemporary employee, you are eligible to enroll and participate in the Plan as soon as your first
anniversary. A complete set of enrollment materials will be provided closer to your eligibility date.
Stock
Ownership
Our shareholders and the investment community often analyze and measure the commitment of management to the company
through share ownership. With this in mind, our Board of Directors adopted an ownership policy for all officers. At your
level you will be required to own RadioShack Corporation common stock having a value equal to one and onehalf times
your base salary. A review to determine compliance with this policy will occur as of each December 31. You are not
expected to reach this level immediately.
Other benefits for which you will be eligible include:
OfficersSeverance Program
Executive Life
Executive LTD
More detailed information about each of these benefits will be covered during your new employee executive orientation.
This is a very exciting time to join RadioShack Corporation. It is my hope that after accepting this contingent employment offer, you will
be available to report for work no later than June 14, 2010.
Please sign, date and return this letter to me at your earliest convenience via facsimile to 8174152490. Meanwhile, if you have any
questions, do not hesitate to call me at 8174154170.
Welcome to RadioShack Corporation!
Sincerely,
/s/ Jim Gooch
Jim Gooch
Executive Vice President Chief Financial Officer
Accepted:
/s/ Mary Ann Doran 6/4/10
__________________________________ ____________________________
Mary Ann Doran Date
Exhibit 10.64
THIRD AMENDED AND RESTATED RADIOSHACK CORPORATION
TERMINATION PROTECTION PLAN
LEVEL I
WHEREAS, the Boardof the Company(as those terms are hereinafter defined) recognizes that the possibility of a future Change
in Control(as hereinafter defined) exists and that the threat or occurrence of a Change in Control could result in significant distractions
to its officers because of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best interest of the Company, its stockholders and the Employer to
retain the services of its officers in the event of a threat or the occurrence of a Change in Control of the Company and to ensure their
continued dedication and efforts in such event without undue concern for their employment and personal financial security;
WHEREAS, in consideration of the foregoing, the Board has previously adopted the RadioShack Corporation Second Amended and
Restated Termination Protection Plan; and
WHEREAS, the Company hereby amends and restates the Plan, effective as of December 31, 2010.
NOW, THEREFORE, in order to fulfill these purposes, the following is hereby adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
1.1 As of December 31, 2010, the Company hereby amends and restates the Second Amended and Restated RadioShack Corporation
Termination Protection Plan Level Iin its entirety as set forth in this document.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have the following respective meanings for purposes of the Plan unless the context
clearly indicates otherwise.
2.1 Accrued Compensation. Accrued Compensationshall mean an amount which shall include all amounts earned or accrued through
the Termination Date (as hereinafter defined) but not paid as of the Termination Date, including (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by the Participant (as hereinafter defined) on behalf of the Employer during the period ending
on the Termination Date in accordance with the Employers business expense reimbursement policies, (iii) vacation pay as required by
law, and (iv) bonuses and incentive compensation, other than a Pro Rata Bonus(as hereinafter defined); provided that the Plan shall in
no event be deemed to modify, alter or amend the terms of any plan, policy, practice or program of, or any contract or agreement with, the
Company or any
1
Subsidiary applicable to the time and form of payment of any such amounts, and all amounts shall be paid in accordance with the terms of
such plan, policy, practice or program under which the amounts have accrued.
2.2 Base Amount. Base Amountshall mean the greater of the Participants annual base salary (a) at the rate in effect on the
Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall
include all amounts of the Participants base salary that are deferred under the Employers qualified and nonqualified employee benefit
plans.
2.3 Benefits Amount. Benefits Amountshall mean an amount equal to thirty percent (30%) of the Participants Base Amount.
2.4 Board. Boardshall mean the Board of Directors of the Company.
2.5 Bonus Amount. Bonus Amountshall mean the highest annual bonus paid or payable to the Participant for any fiscal year in
respect of the three (3) full fiscal years ended prior to the Change in Control.
2.6 Business Day. Business Dayshall mean a day, other than Saturday, Sunday or other day on which commercial banks in Fort
Worth, Texas are authorized or required by applicable law to close.
2.7 Cause. The Participants Employer may terminate the Participants employment for Causeif the Participant (a) has been
convicted of a felony, (b) failed substantially to perform his or her reasonably assigned duties with his or her Employer (other than a
failure resulting from his or her incapacity due to physical or mental illness), or (c) has intentionally engaged in conduct which is
demonstrably and materially injurious to the Company and/or Employer. No act, or failure to act, on the Participants part, shall be
considered intentionalunless the Participant has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief
that the Participants action or failure to act was in the best interest of the Company and/or Employer.
2.8 Change in Control. Change in Controlshall mean the occurrence during the Term(as hereinafter defined) of any of the
following events:
(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the Voting Securities) by any
Person(as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
934 Act)) immediately after which such Person has Beneficial Ownership(within the meaning of Rule 13d3 promulgated under
the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Companys then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a NonControl
Acquisition (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control.
(A) the Company or (B) any corporation or
2
other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the
Company (for purposes of this definition, a Subsidiary), (ii) the Company or its Subsidiaries, or (iii) any Person in connection with a
NonControl Transaction (as hereinafter defined);
(b) The individuals who, as of the Effective Date, are members of the Board (the Incumbent Board), cease for any reason to constitute
at least twothirds of the Board; provided, however, that if the election, or nomination for election by the Companys stockholders, of any
new director was approved by a vote of at least twothirds of the Incumbent Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of either an actual or threatened Election Contest(as described
in Rule 14a11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a Proxy Contest) including by reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(1) A merger, consolidation, reorganization or other business combination with or into the Company or in which securities of the
(i) the stockholders of the Company, immediately before such merger, consolidation, reorganization or other business combination, own
(ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such
(iii) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that,
other business combination had Beneficial
3
Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities, has Beneficial Ownership of fifteen percent (15%)
or more of the combined voting power of the Surviving Corporations then outstanding voting securities, and
(iv) A transaction described in clauses (i) through (iii) shall herein be referred to as a NonControl Transaction.
(2) A complete liquidation or dissolution of the Company; or
(3) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than (i) any such sale or
disposition that results in at least fifty percent (50%) of the Companys assets being owned by one or more subsidiaries or (ii) a
Securities.
(d) Notwithstanding anything contained in the Plan to the contrary, if the Participants employment is terminated during the Term but
within one (1) year prior to a Change in Control and the Participant reasonably demonstrates that such termination (i) was at the request of
a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a
Change in Control (a Third Party) or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which
actually occurs, then for all purposes of the Plan, the date of a Change in Control with respect to the Participant shall mean the date
immediately prior to the date of such termination of the Participants employment (such a termination, an Anticipatory Termination).
4
2.9 Code. Codemeans the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder, as
amended. Any references to Code sections or related Treasury Regulations are intended to include any successor provisions thereto.
2.10 Company. Companyshall mean RadioShack Corporation and shall include its Successors and Assigns(as hereinafter
defined).
2.11 Disability. Disabilityshall mean a physical or mental infirmity which impairs the Participants ability to substantially perform
his or her duties with his or her Employer for a period of one hundred eighty (180) consecutive days and the Participant has not returned to
his or her full time employment prior to the Termination Date as stated in the Notice of Termination(as hereinafter defined).
2.12 Effective Date. Effective Dateshall be December 31, 2008.
2.13 Eligible Emp1oyee. Eligible Employeeshall mean any officer of the Company on the day on which the Change in Control of the
Company occurs, other than those officers who are parties to a Termination Protection Agreement with the Company or any Subsidiary.
2.14 Employer. Employershall mean the Company or its divisions or its Subsidiaries(as hereinafter defined) with whom the
Eligible Employee is employed.
2.15 Good Reason. Good Reasonshall mean the occurrence after a Change in Control of any of the events or conditions described in
Subsections (i) and (ii) hereof:
(i) the failure by the Employer to (A) comply with the provisions of Section 4.2(a) or (B) pay or provide compensation or benefits
pursuant to the terms of Section 4.3, in either case, within fifteen (15) days of the date notice of such failure is given to the Employer; and
(ii) the failure of the Company and/or the Employer to obtain an agreement from any Successor or Assign of the Company, to assume and
agree to perform the Plan, as contemplated in Section 9.1 hereof, within thirty (30) days after the Change in Control.
Any event or condition described in this Section 2.15(i) and (ii) which occurs during the Term but within one (1) year prior to a Change in
Control but which the Participant reasonably demonstrates (A) was at the request of a Third Party or (B) otherwise arose in connection
with or in anticipation of a Change in Control which actually occurs, shall constitute Good Reason for purposes of the Plan
notwithstanding that it occurred prior to the Change in Control.
2.16 Notice of Termination. Following a Change in Control, Notice of Terminationshall mean a notice of termination of the
Participants employment from the Employer which indicates the specific termination provision in the Plan relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participants employment under the
provision so indicated.
5
2.17 Participant. Participantshall mean an Eligible Employee who satisfies the requirements of Section 3.1 and who has not ceased to
be a Participant pursuant to Section 3.2.
2.18 Plan. Planshall mean this Third Amended and Restated RadioShack Corporation Termination Protection Plan Level I.
2.19 Pro Rata Bonus. Pro Rata Bonusshall mean the Bonus Amount multiplied by a fraction, the numerator of which is the number of
days in the Companys fiscal year through and including the Participants Termination Date and the denominator of which is 365.
2.20 Subsidiary or Subsidiaries. Subsidiaryor Subsidiariesshall mean any corporation in which the Company owns, directly or
indirectly, 50% or more of the total voting power of the corporations outstanding voting securities and any other corporation designated
by the Board as a Subsidiary.
2.21 Successors and Assigns. Successors and Assignsas used herein shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including the Plan) whether by operation of law or otherwise.
2.22 Term. Termshall mean the period of time the Plan remains effective as provided in Section 10.1.
2.23 Termination Date. Termination Dateshall mean in the case of the Participants death, his or her date of death, in the case of
Good Reason, his or her last day of employment and in all other cases, the date specified in the Notice of Termination; provided, however,
if the Participants employment is terminated by the Employer for Cause or due to Disability, the date specified in the Notice of
Termination shall be at least 30 days from the date the Notice of Termination is given to the Participant; provided further, however, that
no such Notice of Termination shall be effective in the case of Disability unless the Participant shall not have returned to the fulltime
performance of his or her duties during the 30day notice period.
ARTICLE III
ELIGIBILITY
3.1 Participation. Each employee shall become a Participant in the Plan immediately upon becoming an Eligible Employee.
3.2 Duration of Participation. A Participant shall cease to be a Participant in the Plan if he or she ceases to be an Eligible Employee of
the Employer at any time prior to a Change in Control. A Participant entitled to receive any amounts set forth in this Plan shall remain a
Participant in the Plan until all amounts he or she is entitled to have been paid to him or her.
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ARTICLE IV
TERMS OF EMPLOYMENT
4.1 Employment Period. The Employer agrees to continue the Participant in its employ, subject to the terms and conditions of this Plan,
for the period commencing on the first date on which a Change in Control occurs during the Term (the Change in Control Date) and
ending on the second anniversary of such date (the Employment Period).
4.2 Position and Duties.
(a) During the Employment Period, (A) the Participants position (including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be commensurate in all material respects with those held, exercised and assigned immediately preceding
the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then the position, authority,
duties and responsibilities in effect immediately prior to such change) and (B) the Participants services shall be performed at the location
where the Participant was employed preceding the Change in Control Date or any office or location within a twenty mile radius of such
location, except for reasonably required travel on the Employers business which is not materially greater than such travel requirements
prior to the Change in Control.
(b) During the Employment Period, and excluding any periods of vacation and sick leave to which the Participant is entitled, the
Participant shall devote reasonable attention and time during normal business hours to the business and affairs of the Employer and to
discharge the responsibilities assigned to the Participant. During the Employment Period, Participant may (A) serve on civic or charitable
boards or committees of notforprofit or similar organizations, (B) teach, and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the Participants responsibilities as an employee of the Employer. To the
extent that any such activities have been conducted by the Participant prior to the Change in Control Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Change in Control Date shall not thereafter be
deemed to interfere with the performance of the Participants responsibilities to the Employer.
4.3 Compensation.
(a) Base Salary. During the Employment Period, the Participant shall receive an annual base salary (Annual Base Salary), which shall
be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which
has been earned but deferred, to the Participant by the Employer and its affiliated companies in respect of the ninety (90) day period
immediately preceding the Change in Control Date. During the Employment Period, the Annual Base Salary shall be reviewed no more
than twelve months after the last salary increase awarded to the Participant prior to the Change in Control Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve
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to limit or reduce any other obligation to the Participant under the Plan. Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in the Plan shall refer to Annual Base Salary as so increased. As used in this Plan, the term
affiliated companiesshall include any company controlled by, controlling or under common control with the Employer.
(b) Annual Bonus. In addition to Annual Base Salary, the Participant shall be entitled to participate, with respect to each fiscal year
ending during the Employment Period, in the Employers annual bonus plan, under terms (including measures of performance, targets
and payout potential) at least as favorable as the terms under such bonus plan as in effect immediately prior to the Change in Control Date
(or, if changed at the request of the third party initiating the Change in Control, then the annual bonus plan in effect immediately prior to
such change) (the Annual Bonus). Each such Annual Bonus shall be paid within fortyfive (45) days following the end of the fiscal
year for which the Annual Bonus is awarded, unless the Participant shall elect to defer the receipt of such Annual Bonus.
(c) Incentive, Savings and Retirement Plans. During the Employment Period, the Participant shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Employer and
its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Participant with incentive
opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities or retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Employer and its affiliated companies for the Participant under such plans, practices, policies and
programs as in effect on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then
such plans, practices, policies and programs as in effect immediately prior to such change) or if more favorable to the Participant, those
provided generally during the two year Employment Period following the Change in Control Date to other peer executives of the
Company and its affiliated companies.
(d) Stock Options and Other Equity Grants. During each year of the Employment Period, the Participant shall receive either (A) stock
option grants pursuant to the Companys 1997 Incentive Stock Plan, the 1999 Incentive Stock Plan or the 2001 Incentive Stock Plan (or
any successor or new plan) for each fiscal year ending during the Employment Period equal to the highest number and value to those
granted to Participant for the year in which the Change in Control occurs (the Stock Option Valuation), or (B) if such Plan or Plans do
not exist, then an amount in cash equal to the Stock Option Valuation amount, which amount shall be subject to any vesting schedule and
other terms and conditions applicable to such grants in the year in which the Change in Control occurred. In addition, during the
Employment Period, the Participant shall receive restricted stock grants pursuant to the Companys 1997 Incentive Stock Plan or any
successor or new plan for each fiscal year during the Employment Period equal to the highest number and value to those granted to
Participant for the year in which the Change in Control occurs (the RSO Valuation), or (B) if such Plan or Plans do not exist, then an
amount in cash equal to the RSO Valuation amount, which amount shall be subject to any vesting schedule and other terms and conditions
applicable to such grants in the year in which the Change in Control occurred.
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(e) Welfare Benefit Plans. During the Employment Period, the Participant and/or the Participants family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the
Employer and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the
Employer and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Participant with
benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the
Participant on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such plans,
practices, policies and programs as in effect immediately prior to such change) or, if more favorable to the Participant, those provided
generally at any time after the Change in Control Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the Participant shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Participant in accordance with the most favorable policies, practices and procedures of the Employer and its
affiliated companies in effect for the Participant on the Change in Control Date (or, if changed at the request of the third party initiating
the Change in Control, then such policies, practices and procedures as in effect immediately prior to such change) or, if more favorable to
the Participant, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated
companies. All reimbursements of eligible expenses under this provision shall be made no later than the last day of the Participants tax
year following the taxable year in which the expenses were incurred. The amount of expenses eligible for reimbursement under this
provision in any calendar year shall not affect the amount of expenses eligible for reimbursement in any other calendar year, and a
Participants right to reimbursement shall not be subject to liquidation or exchange for any other benefit. In all events, reimbursement
shall be made in accordance with Treas. Reg. 1.409A3(i)(1)(iv).
(g) Fringe Benefits. During the Employment Period, the Participant shall be entitled to fringe benefits, or cash payments in lieu of such
fringe benefits, in accordance with the most favorable plans, practices, programs and policies of the Employer and its affiliated companies
in effect for the Participant on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control,
then such plans, practices, programs and policies as in effect immediately prior to such change) or, if more favorable to the Participant, as
in effect generally at any time thereafter with respect to other peer executives of the Employer and its affiliated companies.
(h) Office and Support Staff. During the Employment Period, the Participant shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other assistance, at least equal to the most favorable of the foregoing
provided to the Participant by the Employer and its affiliated companies on the Change in Control Date (or, if changed at the request of the
third party initiating the Change in Control, then such office(s), furnishing, other appointments and assistance as in effect immediately
prior to such change) or, if more favorable to the Participant, as provided generally at any time thereafter with respect to other peer
executives of the Employer and its affiliated companies.
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(i) Vacation. During the Employment Period, the Participant shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Employer and its affiliated companies as in effect for the Participant on the Change in
Control Date (or, if changed at the request of the third party initiating the Change in Control, then such plans, practices, programs and
policies as in effect immediately prior to such change) or, if more favorable to the Participant, as in effect generally at any time thereafter
with respect to other peer executives of the Employer and its affiliated companies.
(j) Indemnification. The Employer shall indemnify the Participant and hold the Participant harmless to the fullest extent permitted by
applicable law and under the bylaws of the Employer against and in respect to any and all actions, suits, proceedings, claims, demands,
judgments, costs, expenses (including reasonable attorneysfees), losses, and damages resulting from the Participants good faith
performance of the Participants duties and obligations with the Employer. This provision is in addition to any other rights of
indemnification the Participant may have pursuant to any indemnification agreement or other agreement, if any, between the Participant
and the Employer.
ARTICLE V
TERMINATION BENEFITS
5.1 Payment of Accrued Compensation. In the event that a Participants employment with his or her Employer is terminated following a
Change in Control during the Term (a) by reason of the Participants death, (b) by his or her Employer for Cause or Disability, or (c) by
the Participant without Good Reason, the Participant shall be entitled to receive and the Company shall pay, his or her Accrued
Compensation and, if such termination is other than by his or her Employer for Cause, a Pro Rata Bonus.
5.2 Payment in Event of Certain Terminations of Employment. In the event that a Participants employment with his or her Employer is
terminated following a Change in Control during the Term by the Participant or by his or her Employer for any reason other than as
specified in Section 5.1, the Participant shall be entitled to receive under the Plan, a cash payment equal to the sum of:
(a) his or her Accrued Compensation and Pro Rata Bonus,
(b) his or her Base Amount,
(c) his or her Bonus Amount, and
(d) his or her Benefits Amount.
Subject to Section 5.7 hereof, the amounts provided for in this Sections 5.2 (other than Accrued Compensation) shall be paid in a single
lump sum cash payment on the 60th day following the Participants Termination Date. A termination of employment shall not be deemed
to have occurred for purposes of any provision of this Plan providing for the payment of any amounts or benefits payable under this Plan
that is nonqualified deferred compensation subject to Code section 409A (such amounts, together, the 09A Deferred Compensation
Amounts),
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upon or following a termination of employment unless such termination is also a separation from servicewithin the meaning of Code
section 409A (a Separation from Service).
5.3 Mitigation. The Participant shall not be required to mitigate the amount of any payment provided for in the Plan by seeking other
employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the
Participant in any subsequent employment.
5.4 Termination Pay. Except as would otherwise result in a violation of Code section 409A, the payments and benefits provided for in
Section 5.2(a), (b), (c) and (d) shall reduce the amount of any cash severance or termination pay payable to the Participant under any other
Employer severance or termination plan, program, policy or practice.
5.5 Accrued Compensation. In the event that a Participants employment with his or her Employer is terminated following a Change in
Control during the Term by the Participant or by his or her Employer, the Employer shall pay all Accrued Compensation to a Participant
on the 30th day following the Termination Date; provided that any Accrued Compensation attributable to a plan, policy practice, program,
contract or agreement shall be paid in accordance with the terms thereof under which the amounts have accrued.
5.6 Insurance. The Employer shall cover the Participant under directors and officers liability insurance both during and, while potential
liability exists, after the Termination Date in the same amount and to the same extent as the Employer covers its other officers or
employees.
5.7 Conditions to Payments. A Participant will not be eligible to receive any payments or benefits made or provided pursuant to this
Article V (other than Accrued Compensation) unless, prior to the 60th day following such Participant's Termination Date, such
Participant:
(a) complies with the provisions of Article VIII hereof;
(b) delivers to the Company of an executed Confidentiality, Nonsolicitation and General Release Agreement (the General Release),
which shall be substantially in the form attached hereto as Exhibit A (with such changes therein or additions thereto as needed under then
applicable law to give effect to its intent and purpose) within twentyone (21) days of presentation thereof by the Company to the
Participant and the revocation period specified in the General Release expires without such Participant exercising his/her right of
revocation as set forth in the General Release; and
(c) delivers to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and
employee benefit plans.
Nevertheless (and regardless of whether the General Release has been executed by the Participant), the Participant shall be entitled to
receive all Accrued Compensation on the 30th day following the Termination Date; provided that any Accrued Compensation attributable
to a plan, policy practice, program, contract or agreement shall be paid in accordance with the terms thereof under which the amounts have
accrued. In the event that the Participant dies before all payments pursuant to this Article V have been paid, all remaining payments shall
be made to the
11
beneficiary specifically designated by the Participant in writing prior to his death, or, if no such beneficiary was designated (or the
Employer is unable in good faith to determine the beneficiary designated), to his or her personal representative or estate.
ARTICLE VI
TERMINATION OF EMPLOYMENT
6.1 Notice of Termination Required. Following a Change in Control, any purported termination of the Participants employment by the
Employer shall be communicated by Notice of Termination to the Participant. For purposes of the Plan, no such purported termination
shall be effective without such Notice of Termination.
ARTICLE VII
LIMITATION ON PAYMENTS BY THE COMPANY
7.1 Excise Tax Limitation.
(a) Notwithstanding anything contained in the Plan to the contrary, to the extent that the payments and benefits provided under the Plan
and benefits provided to, or for the benefit of, the Participant under any other Employer plan or agreement (such payments or benefits are
collectively referred to as the Payments) would be subject to the excise tax (the Excise Tax) imposed under Section 4999 of the
Code, the Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Payments would result in the
Participant retaining a larger amount, on an aftertax basis (taking into account federal, state and local income taxes and the Excise Tax),
than if the Participant received all of the Payments (such reduced amount is hereinafter referred to as the Limited Payment
Amount). The Company shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are
not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination(as hereinafter defined).
(b) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Plan and the
amount of such Limited Payment Amount shall be made by an accounting firm at the Companys expense selected by the Company
which is designated as one of the five (5) largest accounting firms in the United States (the Accounting Firm). The Accounting Firm
shall provide its determination (the Determination), together with detailed supporting calculations and documentation to the Company
and the Participant within five (5) days of the Termination Date if applicable, or such other time as requested by the Company or by the
Participant (provided the Participant reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting
Firm determines that no Excise Tax is payable by the Participant with respect to a Payment or Payments, it shall furnish the Participant
with an opinion reasonably acceptable to the Participant that no Excise Tax will be imposed with respect to any such Payment or
Payments. Within ten (10) days of the delivery of the Determination to the Participant, the Participant shall have the right to dispute the
Determination (the Dispute). If there is no
12
Dispute, the Determination shall be binding, final and conclusive upon the Company and the Participant subject to the application of
Paragraph 7.1(c) below.
(c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to,
or provided for the benefit of, the Participant either have been made or will not be made by the Company which, in either case, will be
inconsistent with the limitations provided in Section 7.1(a) (hereinafter referred to as an Excess Paymentor Underpayment,
respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the IRS) proceeding which
has been finally and conclusively resolved, that an Excess Payment has been made, the Participant shall repay the Excess Payment to the
Company on demand (but not less than ten (10) days after written notice is received by the Participant) together with interest on the
Excess Payment at the Applicable Federal Rate(as defined in Section 1274(d) of the Code) from the date of the Participants receipt of
such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the Company (which
shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii)
pursuant to a determination by a court, or (iii) upon the resolution to the Participants satisfaction of the Dispute, that an Underpayment
has occurred, the Company shall pay an amount equal to the Underpayment to the Participant within ten (10) days of such determination
or resolution together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the
Participant until the date of payment.
ARTICLE VIII
PARTICIPANT COVENANTS
8.1 Confidentiality and Nonsolicitation Agreement. As a condition to receiving the right to receive any benefits under the Plan, each
Participant shall enter into and comply with a Confidentiality, Nonsolicitation and General Release Agreement with the Company,
substantially in the form of Exhibit A hereto.
ARTICLE IX
SUCCESSORS AND ASSIGNS
9.1 Successors and Assigns.
(a) The Plan shall be binding upon and shall inure to the benefit of the Company and the Employer. The Company and the Employer
shall require any Successor or Assign to expressly assume and agree to perform the Plan in the same manner and to the same extent that
the Company and/or the Employer would be required to perform it if no such succession or assignment had taken place.
(b) Neither the Plan nor any right or interest hereunder shall be assignable or transferable by the Participant, his or her beneficiaries or
legal representatives, except by will or by the laws of descent and distribution; provided, however, that the Plan shall inure to the benefit
of and be enforceable by the Participants legal personal representative.
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9.2 Sale of Business or Assets. Notwithstanding anything contained in the Plan to the contrary, if a Participants employment with his or
her Employer is terminated in connection with the sale, divestiture or other disposition of any Subsidiary or division of the Company (or
part thereof) such termination shall not be a termination of employment of the Participant for purposes of the Plan and the Participant shall
not be entitled to benefits from the Company under the Plan as a result of such sale, divestiture, or other disposition, or as a result of any
subsequent termination of employment, provided that (a) the Participant is offered employment by the purchaser or acquiror of such
Subsidiary or division (or part thereof) and (b) the Company obtains an agreement from such purchaser or acquiror to perform the
Companys and/or Employers obligations under the Plan, in the same manner, and to the same extent that the Company and/or the
Employer would be required to perform if no such purchase or acquisition had taken place. In such circumstances, the purchaser or
acquiror shall be solely responsible for providing any benefits payable under the Plan to any such Participant.
ARTICLE X
TERM, AMENDMENT AND PLAN TERMINATION
10.1 Term. The Plan shall continue in effect for a period of two (2) years commencing on the Effective Date and shall be automatically
extended for one (1) year on the first anniversary of the Effective Date and on each anniversary of the Effective Date thereafter unless the
Company shall have delivered a written notice to each Participant at least ninety (90) days prior to any extension that the Plan shall not be
so extended; provided, however, that if a Change in Control occurs while the Plan is in effect, the Plan shall not end prior to the expiration
of two (2) years following the Change in Control.
10.2 Amendment and Termination. Subject to Section 10.1, the Plan may be terminated or amended in any respect by resolution adopted
by twothirds (2/3) of the members of the Incumbent Board; provided, however, that no such amendment or termination of the Plan
during the Term may be made (a) at the request of a Third Party, or (b) otherwise in connection with, or in anticipation of, a Change in
Control; and provided, further, however, that the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation
or termination in any respect whatsoever following a Change in Control. Notwithstanding the preceding sentence, the Board may amend
the Plan and any awards under the Plan at any time without the consent of any Participant, to the extent the Board deems such amendment
to be necessary to comply with the requirements of any applicable tax laws, securities laws, accounting rules and other applicable state
and federal laws.
10.3 Form of Amendment. The form of any amendment or termination of the Plan shall be a written instrument signed by a duly
authorized officer or officers of the Company, certifying that the amendment or termination has been approved by the Board in accordance
with Section 10.2.
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ARTICLE XI
MISCELLANEOUS
11.1 Contractual Right. Upon and after a Change in Control, each Participant shall have a fully vested, nonforfeitable contractual right,
enforceable against the Company, to the benefits provided for under Sections 5.1, 5.2, 5.6 and 5.7 of the Plan upon satisfaction of the
applicable conditions specified in those Sections.
11.2 Employment Status. Prior to a Change in Control, each Eligible Employee shall continue in his or her status as an employeeatwill
and the Plan does not constitute a contract of employment or impose on the Employer any obligation to (a) retain the Participant, (b) make
any payments upon termination of employment, (c) change the status of the Participants employment or (d) change any employment
policies of the Employer.
11.3 Notice. For the purposes of the Plan, notices and all other communications provided for in the Plan (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by a nationally recognized
overnight delivery service or by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given
by each party to the other, provided that all notices to the Company and/or the Employer shall be directed to the attention of the Board
with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of
delivery thereof or on the third business day after the sending thereof, except that notice of change of address shall be effective only upon
receipt.
11.4 Nonexclusivity of Rights. Except as provided in Section 5.4, nothing in the Plan shall prevent or limit the Participants continuing
or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and/or the Employer for which
the Participant may qualify, nor shall anything herein limit or reduce such rights as the Participant may have under any other agreements
with the Company and/or the Employer. Amounts which are Accrued Compensation or which the Participant is otherwise entitled to
receive under any plan or program of the Company and/or the Employer shall be payable in accordance with such plan or program, except
as explicitly modified by the Plan. No additional compensation provided under any benefit or compensation plans to the Participant shall
be deemed to modify or otherwise affect the terms of the Plan or any of the Participants entitlements hereunder.
11.5 Settlement of Claims. The Companys obligation to make the payments provided for in the Plan and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company and/or Employer may have against the Participant or others.
11.6 Trust. All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded and the benefits hereunder shall be
paid only from the general assets of the Company; provided, however, notwithstanding anything contained in the Plan to the contrary,
15
nothing herein shall prevent or prohibit the Company from establishing a trust or other arrangement for the purpose of providing for the
payment of the benefits payable under the Plan.
11.7 Waiver or Discharge. No provision of the Plan may be waived or discharged unless such waiver or discharge is agreed to in writing
and signed by the Participant, the Employer and the Company. No waiver by either the Company, the Employer or any Participant at any
time of any breach by either the Company, the Employer or any Participant of, or compliance with, any condition or provision of the Plan
to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
11.8 Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THE PLAN SHALL IN
ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED,
HOWEVER, THAT IN ANY ACTION INVOLVING A PARTICIPANT, THE COMPANY AND/OR THE EMPLOYER WITH
RESPECT TO ANY CLAIM OR ASSERTION THAT THE PARTICIPANTS EMPLOYMENT WAS PROPERLY TERMINATED
FOR CAUSE, THE COMPANY AND/OR THE EMPLOYER HAS THE BURDEN OF PROVING THAT THE PARTICIPANTS
EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE.
11.9 Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or
enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction, shall not invalidate or render unenforceable such provision in any other jurisdiction.
11.10 Legal Fees. Following a Change in Control, the Company shall pay all legal fees and related expenses (including the costs of
experts, evidence and counsel) incurred by the Participant as they become due as a result of (a) the Participants termination of
employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), or (b)
the Participants seeking to obtain or enforce any right or benefit provided by the Plan (including any such fees and expenses incurred in
connection with the Dispute) or by any other plan or arrangement maintained by the Company and/or Employer under which the
Participant is or may be entitled to receive benefits; provided however, that the circumstances set forth in clauses (a) and (b) (other than as
a result of an Anticipatory Termination) occurred on or after a Change in Control.
11.11 Forum. Any suit brought under the Plan shall be brought in the appropriate state or federal court for Tarrant County, Texas.
11.12 Withholding. The Company may withhold from any amounts payable under the Plan such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
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11.13 Code Section 409A.
(a) It is intended that the Plan and the Boards exercise of authority or discretion hereunder shall comply with the provisions of Code
section 409A and the Treasury Regulations relating thereto so as not to subject a Participant to the payment of interest and tax penalty
which may be imposed under Code section 409A. In furtherance of this interest, to the extent that any regulations or other guidance
issued under Code section 409A after the Effective Date would result in a Participant being subject to payment of interest and tax penalty
under Code section 409A, the Board may amend the Plan, without the Participants consent, including with respect to the timing of
payment of benefits, in order to avoid the application of or to comply with the requirements of Code section 409A; provided, however,
that the Company makes no representation that compensation or benefits payable under this Plan shall be exempt from or comply with
Code section 409A and makes no representation to preclude Code section 409A from applying to the compensation or benefits payable
under the Plan.
(b) With respect to any amount of expenses eligible for reimbursement or the provision of any inkind benefits under this Plan, to the
Participants gross income for federal income tax purposes, such expenses (including, without limitation, expenses associated with
inkind benefits) will be reimbursed by the Employer no later than December 31st of the year following the year in which the Participant
incurs the related expenses. In no event shall the reimbursements or inkind benefits to be provided by the Employer in one taxable year
affect the amount of reimbursements or inkind benefits to be provided in any other taxable year, nor will the Participants right to
reimbursement or inkind benefits be subject to liquidation or exchange for another benefit.
(c) Each payment under this Plan is intended to be a separate paymentand not of a series of payments for purposes of Code section
409A.
(d) Notwithstanding any provisions of the Plan to the contrary, if the Participant is a specified employee(within the meaning of Code
section 409A and determined pursuant to any policies adopted by the Company consistent with Code section 409A) (a Specified
Employee), at the time of the Participants Separation from Service and if any portion of the payments or benefits to be received by the
Participant upon Separation from Service would be considered deferred compensation under Code section 409A and cannot be paid or
provided to the Participant without the Participant incurring taxes, interest or penalties under Code section 409A, amounts that would
otherwise be payable pursuant to this Plan and benefits that would otherwise be provided pursuant to this Plan, in each case, during the
sixmonth period immediately following the Participants Separation from Service will instead be paid or made available on the earlier of
(i) the first business day of the seventh month following the date of the Participants Separation from Service or (ii) the Participants
death (such earlier date, the Delayed Payment Date).
(e) Anything in this Plan to the contrary notwithstanding, in the event of an Anticipatory Termination, any 409A Deferred Compensation
Amounts shall be paid as follows: (i) if the Change in Control is a change in control event,within the meaning of Code section 409A,
(A) except as provided in clause (i)(B), on the date of such change in control event, or (B)
17
if the Participant is a Specified Employee, and the Delayed Payment Date is later than the date of such change in control event, on the
Delayed Payment Date, and (ii) if the Change in Control is not a change in control event,within the meaning of Code section 409A, on
the first anniversary of the date of such Anticipatory Termination to the extent payment on such date would not violate Code section
409A. In the event of an Anticipatory Termination, any payments or benefits required to be paid or provided under this Plan that are not
deferred compensation subject to Code section 409A shall be paid or shall commence being provided on the date of the Change in
Control.
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EXHIBIT A
FORM OF CONFIDENTIALITY, NONSOLICITATION AND GENERAL
RELEASE AGREEMENT
This Confidentiality, Nonsolicitation and General Release Agreement (this "Agreement"), dated ___________, 200__ is between
RadioShack Corporation, a Delaware corporation (the "Company"), and _____________ (the "Participant") (collectively the Parties).
1. Separation of Employment with the Company.
a. Effective _______, 200__ (the Termination Date), Participant is terminated and separated from his/her position as
____________________________________________ of the Company, and Participant thereby relinquishes and resigns from all officer
and director positions, all other titles, and all authorities with respect to the Company or any affiliated entity of the Company and shall be
deemed terminated and separated from employment with the Company for all purposes.
b. As consideration to Participant for this Agreement, the Company agrees to pay Participant his/her Accrued Compensation and Pro Rata
Bonus, Base Amount, Bonus Amount and Benefits Amount in accordance with the Companys Third Amended and Restated Termination
Protection Plan Level 1(the Plan); provided, however, Participant does not exercise his/her right of revocation under Section 6
hereof.
c. This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of
which are incorporated herein by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Plan.
2. Covenants Not to Solicit or Interfere.
a. During the period of time equal to twelve (12) months after the Termination Date, Participant shall not, either directly or indirectly,
within the United States of America or any country of the world in which the Company sells, imports, exports, assembles, packages or
furnishes its products, articles, parts, supplies, accessories or services or is causing them to be sold, imported, exported, assembled,
packaged or furnished through related entities, representatives, agents, or otherwise:
A1
i. solicit or induce, or attempt to solicit or induce, any employee of the Company, current or future, to leave or cease their relationship
with the Company, for any reason whatsoever, or hire any current or future employee of the Company; or
ii. solicit or attempt to solicit the Companys existing or prospective customers to purchase services or products that are competitive
with those manufactured, designed, programmed, serviced, repaired, rented, marketed, offered for sale and/or under any stage of
development by the Company as of the date of Participants separation from the Company. For purposes of this Agreement, existing
customers shall mean those persons or firms that the Company has made a sale to in the twelve (12) months preceding Participants
separation from employment; and prospective customers shall mean those persons or firms whom the Company has solicited and/or
negotiated to sell the Companys products, articles, parts, supplies, accessories or services to within the twelve (12) months preceding
Participants separation from the Company.
b. Participant acknowledges that the Company conducts its business on an international level and has customers throughout the United
States and many other countries, and that the geographic restriction on solicitation is therefore fair and reasonable.
3. Confidential Information.
a. For purposes of this Agreement, Confidential Informationincludes any and all information and trade secrets, whether written or
otherwise, relating to the Companys business, property, products, services, operations, sales, prospects, research, customers, business
relationships, business plans and finances.
b. Participant acknowledges that while employed at the Company, Participant has had access to Confidential Information. Participant
further acknowledges that the Confidential Information is of great value to the Company and that its improper disclosure will cause the
Company to suffer damages, including loss of profits.
c. Participant shall not at any time or in any manner use, copy, disclose, divulge, transmit, convey, transfer or otherwise communicate any
Confidential Information to any person or entity, either directly or indirectly, without the Company's prior written consent.
d. Participant acknowledges that all of the information described in subsection (a) above is Confidential Information,which is the sole
and exclusive property of the Company. Participant acknowledges that all Confidential Information was revealed to Participant in trust,
based solely upon the confidential employment relationship then existing between the Company and Participant. Participant agrees: (1)
that all writings or other records concerning Confidential Information are the sole and exclusive property of the Company; (2) that all
manuals, forms, and supplies furnished to or used by Participant and all data or information placed thereon by Participant or any other
person are the Companys sole and exclusive property; (3) that, upon execution of this Agreement, or upon request of the Company at
any time, Participant shall deliver to the Company all such writings, records, forms, manuals, and supplies and all copies of such; (4) that
Participant will not make or retain any copies of such for his/her own or personal
A2
use, or take the originals or copies of such from the offices of the Company; and (5) that Participant will not, at any time, publish,
distribute, or deliver any such writing or records to any other person or entity, or disclose to any person or entity the contents of such
records or writings or any of the Confidential Information.
e. Participant acknowledges that he/she has not disclosed in the past, and agrees not to disclose in the future, to the Company any
confidential information or trade secrets of former employers or other entities Participant has been associated with.
4. NonDisparagement. Each of Participant and the Company (for purposes hereof, the Companyshall mean only (i) the Company by
press release or other formally released announcement and (ii) the executive officers and directors thereof and not any other employees)
agrees not to make any public statements that disparage the other party, or in the case of the Company, its respective affiliates, employees,
officers, directors, products, articles, parts, supplies, accessories or services. Notwithstanding the foregoing, statements made in the
course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with
such proceedings) shall not be subject to this Section 3.
5. Injunctive Relief; Damages. Participant acknowledges that any breach of this Agreement will cause irreparable injury to the Company
and that money damages alone would be inadequate to compensate it. Upon a breach or threatened breach by Participant of any of this
Agreement, the Company shall be entitled to a temporary restraining order, preliminary injunction, permanent injunction or other relief
restraining Participant from such breach without posting a bond. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies for such breach or threatened breach, including recovery of damages from Participant.
6. General Release
a. The Participant, for himself/herself, his/her spouse, heirs, administrators, children, representatives, executors, successors, assigns, and
all other persons claiming through Participant, if any (collectively, Releasers), knowingly and voluntarily releases and forever
discharges the Company, its affiliates, subsidiaries, divisions, successors and assigns and the current, future and former employees,
officers, directors, trustees and agents thereof, from any and all claims, causes of action, demands, fees and liabilities of any kind
whatsoever, whether known and unknown, against the Company, that Participant has, has ever had or may have as of the date of
execution of this Agreement, including, but not limited to, any alleged violation of:
The Civil Rights Act of 1991;
A3
The Older Workers Benefit Protection Act of 1990;
The Family and Medical Leave Act of 1993;
The Equal Pay Act;
The Texas Labor Code;
The Texas Commission on Human Rights Act;
The Texas Pay Day Act;
Chapter 38 of the Texas Civil Practices and Remedies Code;
Notwithstanding anything herein to the contrary, this Agreement shall not apply to: (i) Participants rights of indemnification and
directorsand officersliability insurance coverage to which he/she was entitled immediately prior to the Termination Date hereof with
regard to his/her service as an officer of the Company; (ii) Participants rights under any taxqualified pension, claims for accrued vested
benefits under any other employee benefit plan, policy or arrangement maintained by the Company or under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and benefits which must be provided to Participant pursuant to the terms of any
employee benefit plan of the Company; (iii) Participants rights under the provisions of the Plan which are intended to survive
termination of employment; or (iv) Participants rights as a stockholder. Excluded from this Agreement are any claims which cannot be
waived by law.
(i) Participant has executed this Agreement knowingly and voluntarily;
(ii) Participant has read and understands this Agreement in its entirety, including the waiver of rights under the Age Discrimination
in Employment Act;
A4
(iii) Participant has been advised and directed orally and in writing (and this subparagraph (b) constitutes such written direction) to
seek legal counsel and any other advice he/she wishes with respect to the terms of this Agreement before executing it;
(iv) Participant has sought such counsel, or freely and voluntarily waives the right to consult with counsel, and Participant has had
an opportunity, if he/she so desires, to discuss with counsel the terms of this Agreement and their meaning;
(v) Participant enters into this Agreement knowingly and voluntarily, without duress or reservation of any kind, and after having
given the matter full and careful consideration; and
(vi) Participant has been offered 21 calendar days after receipt of this Agreement to consider its terms before executing it. If
Participant has not executed this Agreement within 21 days after receipt, this Agreement shall be unenforceable and null and void.
c. Participant shall have 7 days from the date hereof to revoke this Agreement by providing written notice of the revocation as set
forth in Section 5, below, in which event this Agreement shall be unenforceable and null and void.
d. 21 DAYS TO SIGN; 7DAY REVOCATION PERIOD. PARTICIPANT UNDERSTANDS THAT HE/SHE MAY TAKE UP
TO 21 CALENDAR DAYS FROM THE DATE OF RECEIPT OF THIS AGREEMENT TO CONSIDER THIS AGREEMENT BEFORE
SIGNING IT. FULLY UNDERSTANDING PARTICIPANTS RIGHT TO TAKE 21 DAYS TO CONSIDER SIGNING THIS
AGREEMENT, AND AFTER HAVING SUFFICIENT TIME TO CONSIDER PARTICIPANTS OPTIONS, PARTICIPANT HEREBY
WAIVES HIS/HER RIGHT TO TAKE THE FULL 21 DAY PERIOD. PARTICIPANT FURTHER UNDERSTANDS THAT HE/SHE
MAY REVOKE THIS AGREEMENT AT ANY TIME DURING THE SEVEN (7) CALENDAR DAYS AFTER SIGNING IT, AND
THAT THIS AGREEMENT SHALL NOT BECOME BINDING UNTIL THE SEVEN (7) DAY REVOCATION PERIOD HAS
PASSED.
MS CF5121
The revocation must be received no later than 5:00 p.m. on the seventh day following Participants execution of this Agreement.
7. Cooperation. Participant agrees to cooperate with the Company, and its financial and legal advisors, and/or government officials, in
any claims, investigations, administrative proceedings, lawsuits, and other legal, internal or business matters, as reasonably requested by
the Company. Also, to the extent Participant incurs travel or other expenses with respect to such
A5
activities, the Company will reimburse his/her for such reasonable expenses documented and approved in accordance with the
Companys then current travel policy.
8. No Admission. This Agreement shall not in any way be construed as an admission by the Company of any act of discrimination or
other unlawful act whatsoever against Participant or any other person, and the Company specifically disclaims any liability to or
discrimination against Participant or any other person on the part of itself, its employees, or its agents.
9. Severability. It is the desire and intent of the Parties that the provisions of this Agreement shall be enforced to the fullest extent
permissible. Accordingly, if any provision of this Agreement shall prove to be invalid or unenforceable, the remainder of this Agreement
shall not be affected, and in lieu, a provision as similar in terms as possible shall be added.
between the parties with respect to the subject matter hereof and this Agreement may not be modified by any oral or written agreement
unless same is in writing and signed by both parties.
11. Governing Law. This Agreement shall be governed by the internal laws (and not the choice of law principles) of the State of Texas,
except for the application of preemptive federal law.
12. Survival. Participant's obligations under this Agreement shall survive the termination of Participant's employment and shall thereafter
be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of any
contract or of any other duty owed to Participant.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first above written.
THE COMPANY:
RadioShack Corporation, for itself and its
subsidiaries
By: _______________________________
Its: ______________________________
PARTICIPANT:
_______________________________
Name: _______________________________
A6
Exhibit 10.70
2011 EXECUTIVE DEFERRED COMPENSATION PLAN
Effective as of December 1, 2010
RadioShack Corporation, a Delaware corporation (the "Company"), hereby adopts the 2011 RadioShack Corporation Executive Deferred
Compensation Plan, effective as of December 1, 2010. Unless otherwise indicated, all sectionor Codereferences are to the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations promulgated under the authority of the applicable Code section and, in
each case, any successor provisions thereto.
ARTICLE ONE
PURPOSE
1.1 General. The purpose of the Plan is to attract, motivate, and retain officers of the Company and its subsidiaries by providing
participants with an opportunity to defer the receipt of compensation earned in 2011 and subsequent years and to accumulate
earnings thereon on a taxdeferred basis.
1.2 Unfunded Top Hat Plan. The Plan is intended to be an unfunded plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended, and maintained primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees.
ARTICLE TWO
DEFINITIONS
The following capitalized terms used in the Plan shall have the respective meanings set forth in this Article:
2.1 Board. Boardmeans the Board of Directors of the Company.
2.2Bonus Deferral Election. Bonus Deferral Electionmeans an election to defer payment of an annual bonus distributed in the form of
cash. Bonus Deferral Elections shall take the form prescribed by the Committee and shall be subject to the terms and conditions of
Article Four.
2.3 Change in Control. Change in Controlshall mean and of the following events:
(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the Voting Securities) by
any Person(as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the 934 Act)) immediately after which such Person has Beneficial Ownership(within the meaning of Rule
13d3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Companys
then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a NonControl Acquisition (as hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control.
1
(b) The individuals who, as of December 1, 2010, are members of the Board (the Incumbent Board), cease for any reason to
constitute at least twothirds of the Board; provided, however, that if the election, or nomination for election by the
Companys stockholders, of any new director was approved by a vote of at least twothirds of the Incumbent Board, such
new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however,
that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened Election Contest(as described in Rule 14a11 promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a Proxy Contest)
including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or
(i)A merger, consolidation, reorganization or other business combination with or into the Company or in which securities of the
(A) the stockholders of the Company, immediately before such merger, consolidation, reorganization or other business
combination, own directly or indirectly immediately following such merger, consolidation, reorganization or other business combination,
at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such
merger or consolidation, reorganization or other business combination (the Surviving Corporation) in substantially the same proportion
as their ownership of the Voting Securities immediately before such merger, consolidation, reorganization or other business combination,
(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for
such merger, consolidation, reorganization or other business combination constitute at least twothirds of the members of the board of
directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the combined voting power
of the outstanding voting securities of the Surviving Corporation, or
(C) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof)
that, immediately prior to such merger, consolidation, reorganization or other business combination was maintained by the Company, the
other business combination had
2
Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities, has Beneficial Ownership of fifteen
percent (15%) or more of the combined voting power of the Surviving Corporations then outstanding voting securities, and
(iii) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than (i) any such
sale or disposition that results in at least fifty percent (50%) of the Companys assets being owned by one or more
subsidiaries or (ii) a distribution to the Companys stockholders of the stock of a subsidiary or any other assets).
Securities.
2.4Committee. Committeemeans a committee of the Board consisting of at least two members appointed by the Board to administer
the Plan and to perform the functions set forth herein.
2.5 Company. Companymeans RadioShack Corporation, a Delaware corporation, or any successor entity thereto, including
without limitation, the transferee of all or substantially all of the stock or assets of the Company.
2.6Deferral Account. Deferral Accountmeans a notional account established and maintained for each Participant in accordance with
Article Five hereof, for bookkeeping purposes only, to measure the value of elective deferrals made under the Plan and the earnings
thereon. Amounts credited to the Deferral Account shall be expressed in dollars and cents. To the extent that a Participant makes
different Payment Elections for different deferrals pursuant to Section 6.2, the Deferral Account shall be divided into separate
subaccounts as necessary to reflect such Payment Elections.
2.7 Deferral Election. Deferral Electionmeans a Salary Deferral Election or a Bonus Deferral Election, as applicable.
3
2.8LTIP Deferral Election. LTIP Deferral Electionmeans an election to defer payment of a longterm incentive award distributed in
the form of cash. LTIP Deferral Elections shall take the form prescribed by the Committee and shall be subject to the terms and
conditions of Article Four.
2.9 LTIP Period. LTIP Periodmeans a period of time established by a committee of the Board for a longterm incentive award
that is greater than twelve (12) months.
2.10Participant. Participantmeans (a) an eligible employee described in Section 4.1 who has filed a Deferral Election with the
Committee and is participating in the Plan in accordance with the provisions of Article Four, and (b) any other person who has a
Deferral Account by reason of his or her prior status as an eligible employee.
2.11Payment Election. Payment Electionmeans an election to determine the form of payment of amounts deferred
hereunder. Payment Elections shall take the form prescribed by the Committee and shall be subject to the terms and conditions of
Article Six.
2.12 Plan. Planmeans the RadioShack Corporation 2011 Executive Deferred Compensation Plan, as amended from time to time.
2.13 Plan Year. Plan Yearmeans the period beginning on the effective date of the Plan and ending on the immediately following
December 31 and each subsequent calendar year.
2.14 Salary Deferral Election. Salary Deferral Electionmeans an election to defer payment of base salary. Salary Deferral
Elections shall take the form prescribed by the Committee and shall be subject to the terms and conditions of Article Four.
2.15 Separation from Service. Separation from Servicemeans a Participants separation from servicewithin the meaning of
Treasury Regulation 1.409A1(h).
2.16Unforeseeable Emergency. Unforeseeable Emergencymeans a severe financial hardship of a Participant resulting from an illness
or accident of the Participant, the Participants spouse, the Participants beneficiary, or a dependent (as defined in Code section 152,
without regard to Code sections 152(b)(1), (b)(2) and (d)(1)(B)) of the Participant, loss of the Participants property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
ARTICLE THREE
ADMINISTRATION
3.1Committee. The Plan shall be administered by the Committee which shall hold meetings at such times as may be necessary for the
proper administration of the Plan. Except as otherwise provided in the Plan, the Committee shall have full power to construe and
interpret the Plan, establish and amend rules and regulations for its administration, and perform all other acts relating to the Plan,
including the delegation of administrative responsibilities that it believes reasonable and proper.
4
3.2Duties. The Committee, or any person or entity designated by the Committee, shall be responsible for the administration of the Plan
including but not limited to determination of eligibility, receiving Deferral Elections, provision of investment choices, distribution of
benefits, maintenance of account balances, calculation of hypothetical investment returns and any other duties concerning the
daytoday operation of the Plan. The Plan is intended to comply with the requirements of Code section 409A and shall be
administered and interpreted accordingly.
3.3 Adjudication. Any decision made, or action taken, by the Committee or the Board arising out of, or in connection with, the
interpretation and administration of the Plan, including but not limited to the adjudication of claims and payment of benefits
hereunder, shall be final and conclusive.
3.4 Indemnification. No member of the Committee or its delegate shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or any transaction hereunder, except for liability arising from his
or her own willful misfeasance, gross negligence or reckless disregard of his or her duties. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in connection with any actions in administering this
Plan or in authorizing, denying authorization to, or failing to authorize any transaction hereunder. Payment of any
indemnity under this section that is not exempt from Code section 409A shall comply with Code section 409As
requirements for reimbursement plans, as set forth in Treas. Reg. 1.409A3(i)(1)(iv). For this purpose (a) the indemnity
under this provision shall continue for the indemnified persons lifetime, and, if later, until the complete disposition of all
covered claims; (b) the amount of expenses indemnified during one taxable year of an indemnified person shall not affect
the amount of expenses indemnified in any other taxable year; (c) payment of an indemnity shall be made by the last day
of the indemnified persons taxable year following the taxable year in which the expense was incurred; and (d) the
indemnified persons right to indemnification shall not be subject to liquidation or exchange for any other benefit.
ARTICLE FOUR
PARTICIPATION
4.1Eligibility. Participation in the Plan shall be limited to regular fulltime employees of the Company and its subsidiaries who are
officers.
4.2 Filing an Election.
(a) Salary Deferral Elections. An eligible employee described in Section 4.1 may elect to defer a portion of his or her base salary
earned during pay periods beginning in a Plan Year by filing with the Committee a completed and fully executed Salary
Deferral Election by December 31 of the immediately preceding Plan Year.
(b) Bonus Deferral Elections. An eligible employee described in Section 4.1 may elect to defer a portion of his or her annual
bonus earned during a Plan Year by filing with the Committee a completed and fully executed Bonus Deferral Election (in
compliance with Treasury Regulation 1.409A2(a)(8)) by June 30 of the Plan Year.
5
(c) LTIP Deferral Elections. An eligible employee described in Section 4.1 may elect to defer a portion of his or her cash
longterm incentive award earned during an LTIP Period by filing with the Committee a completed and fully executed
LTIP Deferral Election (in compliance with Treasury Regulation 1.409A2(a)(8)) by June 30 of the last Plan Year in the
applicable LTIP Period.
(d) New Participants. Notwithstanding the foregoing, if, during any Plan Year or LTIP Period beginning in 2011 or any
subsequent year, any employee of the Company or its subsidiaries becomes eligible to participate in the Plan under
Section 4.1, and such employee qualifies as initially eligible under the standards set forth in Treas. Reg. 1.409A2(a)(7),
then such employee may elect to defer a portion of his or her base salary and/or annual bonus earned during such Plan
Year, and/or his or her longterm incentive award earned during a LTIP Period that includes such Plan Year by filing with
the Committee a Salary Deferral Election, Bonus Deferral Election, and/or LTIP Deferral Election within 30 days after the
date the employee becomes eligible for the Plan. Any such Salary Deferral Election shall apply to base salary earned
during pay periods beginning in the Plan Year after the date of the election. Any such Bonus Deferral Election shall apply
to that portion of the annual bonus earned during the Plan Year equal to the total amount of the bonus multiplied by the
ratio of the number of days remaining in the Plan Year after the date of the election over the total number of days in the
Plan Year. Any such LTIP Deferral Election shall apply to that portion of the designated longterm incentive award
earned during the corresponding LTIP Period equal to the total amount of the longterm incentive award multiplied by the
ratio of the number of days remaining in the LTIP Period after the date of the election over the total number of days in the
LTIP Period. With respect to Bonus Deferral Elections and LTIP Deferral Elections referred to in the first sentence of this
Section 4.2(d), employees becoming eligible to participate in the Plan during a Plan Year or LTIP Period may nonetheless
file a Bonus Deferral Election and/or LTIP Deferral Election for such Plan Year or LTIP Period pursuant to Sections
4.2(b) and 4.2(c), respectively, if such Deferral Election(s) would be in compliance with Treasury Regulation
1.409A2(a)(8).
4.3 Application of Deferral Elections. A Deferral Election shall become irrevocable once filed with the Committee. A Deferral
Election filed for a Plan Year shall be effective for base salary and/or annual bonus to be earned during that Plan Year
only. An LTIP Deferral Election filed for an LTIP Period shall be effective only for the longterm incentive award to be
earned during the corresponding LTIP Period. For each subsequent Plan Year, a Participant who wishes to defer base salary
and/or an annual bonus must file a new complete and fully executed Salary Deferral Election and/or Bonus Deferral Election
with the Committee as provided in Section 4.2. For each subsequent LTIP Period, a Participant who wishes to defer a
longterm incentive award must file a new complete and fully executed LTIP Deferral Election with the Committee as
provided in Section 4.2.
4.4 Compensation Subject to Deferral. A Deferral Election shall designate the dollar amount or percentage of base salary,
annual bonus and/or longterm incentive award to be deferred in accordance with the terms prescribed therein. Unless
otherwise permitted by the Committee, the maximum amount of base salary that a Participant may elect to defer for a Plan
Year is 80% of base salary, and the maximum amount of annual bonus that a Participant may elect to defer for a Plan Year is
80% of the annual bonus. Similarly, unless otherwise permitted by the Committee, the maximum amount of a longterm
incentive award that a Participant may elect to defer for a given LTIP Period is 80% of the corresponding longterm incentive
award. Any election by a Participant to defer an amount in excess of either maximum limit shall be automatically reduced to
comply with such limit.
6
ARTICLE FIVE
CREDITING, VESTING AND INVESTMENT OF ELECTIVE DEFERRALS
5.1Crediting of Elective Deferrals. Amounts deferred by a Participant under Article Four shall be credited to the Participants Deferral
Account if, as, and when such amounts would otherwise have been paid to the Participant or at such other times as the Committee shall
determine, provided that the Participants deferrals during the year, in the aggregate, reflect his or her Deferral Election in accordance
with Code section 409A.
5.2Vesting. Each Participant shall have a nonforfeitable and fully vested right to the value in his or her Deferral Account at all times.
5.3Investment Choices. Each Participant shall be entitled to direct the deemed investment of the amounts credited to his or her Deferral
Account in any of the investment choices or combination of investment choices as may be offered by the Committee from time to time
in accordance with the rules, regulations and procedures established by the Committee. The Committee may add or remove investment
choices at its sole discretion at any time. However, notwithstanding anything contained herein to the contrary, Participants shall not be
permitted to purchase or sell securities of the Company within the Plan.
5.4 Investment Earnings. Each Participants Deferral Account shall be credited with earnings and losses in accordance with such
Participants investment choices. Earnings and losses shall begin to accrue with respect to amounts credited to a
Participants Deferral Account under Section 5.1 in accordance with the procedures established by the Committee.
ARTICLE SIX
DISTRIBUTIONS
6.1 Timing and Form of Payment.
(a)Payment Event. A Participants Deferral Account shall be paid to the Participant as set forth in their Payment Election(s), or as set
forth in Section 6.1(b) in the absence of a Payment Election.
(b)Commencement Date. In the absence of a Payment Election, payment shall be made or commence on the first business day of the
month next following the date that is six (6) months after the date of the Participants Separation from Service.
(c)Form of Payment. Payment shall be made in a single lump sum except as otherwise elected by the Participant in accordance with
Section 6.2(a).
(d) Medium of Payment. Any payment from a Participants Deferral Account shall be made in the form of cash.
7
6.2 Payment Elections.
(a) Payment Elections. With each Deferral Election, a Participant may file a Payment Election that provides for the date(s)
and form of payment for amounts deferred under such Deferral Election and earnings thereon. A Participant may elect to
have such deferred amounts paid in a single lump sum or in up to four (4) installments. The Participant may elect the
date(s) on which payments are to be made or commence, provided however, the total number of payment dates elected by
a Participant among all of the Participants Payment Elections on which payments are to be made or commence shall not
exceed three (3) unique payment dates. If a Participant files a Payment Election containing a payment date in excess of
three (3) total payment dates, payment(s) shall be made or commence at the time provided in Section 6.1(b) as if no date
for such Payment Election had been specified. The amount of each installment may be established by the Participant at
the time of their Deferral Election as a percentage of the total value in their Deferral Account corresponding to the
Deferral Election, provided that the sum of the percentages must equal 100%. If a Participant does not make a payment
election with respect to any deferred amounts, such amounts shall be paid in a single lump sum at the time provided in
Section 6.1(b).
(b)Separation from Service Before Age 55. Notwithstanding the foregoing or any Payment Election made by a Participant, if a
Participant has a Separation from Service for any reason prior to reaching age 55, the Participants entire Deferral Account shall be
paid to the Participant in a single lump sum at the time provided in Section 6.1(b).
6.3Death. Notwithstanding the foregoing or any Payment Election made by a Participant, if a Participant dies before the complete
distribution of his or her Deferral Account, the entire Deferral Account, or the remaining portion of the Deferral Account if
distributions have already commenced in the form of installments, shall be paid to the Participants beneficiary in a single lump sum
within 30 days following the date the Committee receives notice of the Participants death, accompanied by a death certificate.
6.4 Change in Control. Notwithstanding the foregoing or any Payment Election made by a Participant, if a Change in Control
occurs with respect to the Company, the Participants entire Deferral Account shall be paid to the Participant (or his or her
beneficiary) in a single lump sum within 30 days following the date of the Change in Control (subject to any required delay as
provided in Treasury Regulation 1.409A3(i)(2)), and all deferrals being made at the time of the Change in Control pursuant
to prior Deferral Elections shall cease.
6.5 Unforeseeable Emergency. In the event that a Participant suffers an Unforeseeable Emergency, the Participant may
request that the Committee approve an immediate distribution of all or a portion of the Participants Deferral Account. If
the Committee approves such request, the Company shall pay to the Participant, within 30 days after the date of the
Committees approval (subject to any required delay as provided in Treasury Regulation 1.409A3(i)(2)), an amount
equal to the lesser of (a) the value of the Participants Deferral Account and (b) the amount reasonably necessary to
satisfy the emergency need (plus amounts necessary to pay any federal, state, local, or foreign income taxes or penalties
reasonably anticipated to result from the distribution), taking into account the extent to which such need is or may be
relieved through reimbursement or compensation from insurance or otherwise, or by liquidation of the Participant's assets,
to the extent the liquidation of such assets would not itself cause severe financial hardship. If the Participants Deferral
Account is divided into separate subaccounts as provided in Section 2.6, the amount of the distribution shall be taken pro
rata from such subaccounts. Whenever a Participant receives a distribution under this Section 6.5, the Participant shall be
deemed to have revoked all current Deferral Elections under the Plan effective as of the date of the distribution, but will be
permitted to participate in the next election period in accordance with Section 4.2 unless otherwise determined by the
Committee.
8
6.6Early Payment. The Committee, in its sole discretion, may authorize early payment of all or a portion of a Participants Deferral
Account to the extent permitted by Treas. Reg. 1.409A3(j)(4). Without limitation, payment may be accelerated:
(a) To comply with a domestic relations order as defined in Code Section 414(p)(1)(B);
(b) To comply with ethics laws or conflicts of interest laws;
(c)To cashout a Participant's entire remaining interest under the Plan (or plans required to be aggregated) if the payment is not greater
than the Code Section 402(g) limit (not including catchup contributions);
(d)To pay the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a), and 3121(v)(2) on
compensation deferred under the Plan, to pay the income tax at source on wages imposed under Code Section 3401 or the
corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA tax amount,
or to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes;
(e) When amounts become includible in income due to a failure to comply with Code Section 409A;
(f) To cancel a Deferral Election due to an Unforeseeable Emergency or a hardship distribution pursuant to Treas. Reg.
1.401(k)1(d)(3);
(g)Pursuant to a termination and liquidation of the Plan upon bankruptcy, a Change in Control, or Company discretion as provided in
Treas. Reg. 1.409A3(j)(4)(ix);
(h)To reflect payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred
under the Plan before the amount is paid or made available to the Participant;
(i) To cancel a Deferral Election due to disability pursuant to Treas. Reg. 1.409A3(j)(4)(xii);
(j)To satisfy a debt owed by the Participant to the Company where such debt is incurred in the ordinary course of the service relationship,
the reduction does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would
have been due and collected from the Company; and
(k) As part of a settlement between the Participant and the Company of an arm's length, bona fide dispute as to the Participant's
right to the deferred amount.
9
6.7 Valuation of Distributions. Each distribution to a Participant shall be based on the value of the Participants Deferral Account
(or the applicable subaccount) as of the last business day of the month preceding the date of payment.
6.8 Reemployment.
(a) Continued Distribution of Account. If, after a Participants Separation from Service, the Participant is reemployed by the
Company or a subsidiary prior to the complete distribution of his or her Deferral Account, distributions from the Deferral
Account shall be made as scheduled without regard to the Participants reemployment.
(b)New Deferral Account. A reemployed Participant who is eligible for the Plan may make new Deferral Elections pursuant to Section
4.2, in which case a new Deferral Account shall be established for such Participant to which deferrals relating to the period following
his or her reemployment shall be credited. Such new Deferral Account shall be paid following the Participants subsequent
Separation from Service in accordance with this Article, except as otherwise provided herein.
ARTICLE SEVEN
BENEFICIARY DESIGNATION
7.1 Designation of Beneficiary. Each Participant shall have the right, at any time, to designate any individual or entity as his or
her designated beneficiary. A beneficiary designation shall be made, and may only be amended or revoked, by the Participant
by filing a written designation with the Committee or its designee in accordance with procedures adopted by the
Committee. Any such beneficiary designation shall apply to all benefits under this Plan.
7.2No Designated Beneficiary. If a Participant fails to designate a beneficiary as provided above, or if all designated beneficiaries
predecease the Participant, then the Participants beneficiary for purposes of the Plan shall be the Participants estate.
ARTICLE EIGHT
CLAIMS PROCEDURES
A claim for benefits under the Plan shall be handled as follows:
8.1 Filing a Claim. Each individual who claims to be eligible for benefits under the Plan (a Claimant) may submit a written
claim for benefits (a Claim) to the Committee where the individual believes a benefit to which such individual is eligible has
not been provided under the Plan. A Claim must be set forth in writing and must be submitted to the Committee.
8.2Review of Claim. The Committee shall evaluate each properly filed Claim and notify the Claimant of the approval or denial of the
Claim within 30 days after the Committee receives the Claim.
8.3Notice of Claim Denial. If a Claim is denied in whole or in part, the Committee shall provide the Claimant with a written notice setting
forth: (a) the specific reasons for the denial; (b) references to pertinent Plan provisions upon which the denial is based; and (c) a
description of any additional material or information needed and an explanation of why such material or information is necessary.
10
8.4Procedures Control. No Claimant or other individual may file any claim for benefits or request a review of a denial of any claim unless
such person follows the provisions of this Article. A Claimant or other individual shall not be entitled to bring any action in any court
unless such person has submitted a Claim and has either (a) received notice that the Claim has been denied in whole or in part, or (b)
has received neither payment of the benefits requested in the Claim, nor notice that the Claim has been denied within 30 days of the
date the Claim was received by the Committee.
8.5 Compliance with Code Section 409A. Any claim for benefits under the Plan must be made by the Claimant no later than the
time prescribed by Treas. Reg. 1.409A3(g) (or any successor provision), to the extent applicable. If a Claimants claim or
appeal is approved, any resulting payment of benefits will be made no later than the time prescribed for payment of benefits by
Treas. Reg. 1.409A3(g) (or any successor provision), to the extent applicable.
ARTICLE NINE
AMENDMENT OR TERMINATION
The Board or the Committee may (in its sole discretion) amend, modify or terminate the Plan at any time for any or no reason; provided,
however, no amendment, modification or termination shall, without the consent of the Participant, adversely affect such Participants
right to payment from the Participants Deferral Account as of the date of such amendment, modification or termination. If the Plan is
terminated, distributions to Participants and beneficiaries shall be made on the dates on which such distributions would be made under the
Plan without regard to such termination, except that payments may be accelerated without the Participants consent to the extent
permitted by Code section 409A.
ARTICLE TEN
MISCELLANEOUS
10.1Unsecured Right. Any right to receive a payment under the Plan shall be no greater than that of an unsecured general creditor of the
Company. No amount payable under the Plan may be assigned, transferred, encumbered or subject to any legal process for the
payment of any claim against a Participant. The Committee may, but need not, establish a grantor trust (commonly referred to as a
rabbi trust) to hold assets of the Company that may, but need not, be used to pay benefits hereunder. No assets shall be transferred
to a trust if such transfer would result in the taxation of benefits prior to distribution under Code section 409A(b).
10.2No Right to Continued Employment. Participation in the Plan shall not give any employee any right to remain in the employ of the
Company or any subsidiary or affiliate thereof.
10.3Withholding. The Company shall withhold or require a Participant to pay or provide for payment of all applicable income and other
taxes with respect to amounts deferred or paid under the Plan.
11
10.4 Statement of Accounts. Statements shall be sent no less frequently than annually to each Participant (or to such Participants
beneficiary or legal representative).
10.5 Governing Law, Jurisdiction, and Venue. The Plan shall be construed, governed and enforced in accordance with the laws of
the State of Texas, without reference to rules relating to conflicts of law, except to the extent preempted by federal law. Any
action arising out of or relating to the Plan, the Company, Participants, or any transaction under the Plan shall be brought in
state or federal courts located in Tarrant County, Texas.
10.6Application of Code Section 409A. It is intended that the Plan and the Committees exercise of authority or discretion hereunder
shall comply with the provisions of Code section 409A and the Treasury Regulations thereunder so as not to subject a Participant to
the payment of interest and tax penalty which may be imposed under Code section 409A. In furtherance of this interest, to the extent
that any Treasury Regulations or other guidance issued under Code section 409A would result in a Participant being subject to
payment of interest and tax penalty under Code section 409A, the Committee may amend the Plan, without the Participants consent,
including with respect to the timing of payment of benefits, in order to comply with the requirements of Code section 409A; provided,
however, that the Company makes no representation that benefits payable under this Plan shall be exempt from or comply with Code
section 409A and makes no representation to preclude Code section 409A from applying to the benefits payable under the Plan.
10.7Compliance with Other Laws. The Committee may, from time to time, impose additional restrictions upon Participants as it deems
necessary, advisable or appropriate in order to comply with applicable federal and state securities laws, or other federal laws.
12
Exhibit 21
List of Significant Subsidiaries
State or Jurisdiction of
Subsidiaries Incorporation
Tandy Finance Corporation Delaware
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S8 (Nos. 33349369, 33381405,
33374894, 333102141, 333102142, 333118122, 333138453, 333138454, 333143219, 333159284, and 333159483) of
RadioShack Corporation of our report dated February 22, 2011 relating to the financial statements and the effectiveness of internal control
over financial reporting, which appears in this Form 10K.
/s/ PricewaterhouseCoopers LLP
Fort Worth, Texas
February 22, 2011
Exhibit 31 a
CERTIFICATIONS
I, Julian C. Day, certify that:
1. I have reviewed this Annual Report on Form 10K of RadioShack Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: February 22, 2011 By /s/ Julian C. Day
Julian C. Day
Chief Executive Officer
Exhibit 31 b
CERTIFICATIONS
I, James F. Gooch, certify that:
1. I have reviewed this Annual Report on Form 10K of RadioShack Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: February 22, 2011 By /s/ James F. Gooch
James F. Gooch
President and
Chief Financial Officer
Exhibit 32
SECTION 1350 CERTIFICATIONS
In connection with the Annual Report on Form 10K of RadioShack Corporation (the Company) for the period ending December 31,
2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Julian C. Day, Chief Executive Officer
of the Company, and James F. Gooch, President and Chief Financial Officer of the Company, certify to our knowledge, pursuant to 18
U.S.C. 1350, as adopted pursuant to 906 of the SarbanesOxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
/s/ Julian C. Day
Julian C. Day
Chief Executive Officer
February 22, 2011
/s/ James F. Gooch
James F. Gooch
President and Chief Financial Officer
February 22, 2011
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.

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